Should product advice negate tax deductibility?

Most financial advisers believe financial advice should be tax deductible for clients, but a significant cohort believe it should not be tax deductible for advice around product sales.

A survey conducted by Money Management has revealed that while virtually 100 per cent of advisers support the Government moving to make advice tax-deductible, there is disagreement around whether that deductibility should be applied to all advice.

In fact, the survey revealed most support for highly specific advice around transition to retirement (TTR) and superannuation, with significantly less support for where life/risk sales are concerned.

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The survey has been undertaken at the same time as the Financial Planning Association (FPA) has pressed the Government to make advice tax deductible around advice helping people decide whether or not to opt in to insurance inside superannuation.

What the Money Management research has revealed is that while 70 per cent of respondents supported tax deductibility for “holistic” advice they became somewhat more selective when they were asked to specify what sorts of advice should qualify.

Where life/risk advice was concerned, only 56 per cent of respondents believed it should be tax deductible, while nearly 44 per cent believed it should not.

This compared to the 75 per cent who supported superannuation advice being tax deductible and the 69 per cent of transition to retirement advice.

 




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Comments

Comments

If complex advice is provided by an Authorised Representative in regard to personal or business related risk insurance strategy and the advice is not acted on , then the cost of the advice provided and received should be tax deductible.
If the risk insurance product is implemented, the premium cost of the Life, TPD and Trauma Insurance components should be tax deductible without claim proceeds being assessable if outside the superannuation space.
Income Protection Insurance premiums being mostly deductible but assessable at claim time as replacement of income is acceptable.
The objective surely should be to make personal risk insurance advice and product more affordable to the consumer to attempt to encourage a greater take up of both advice and risk insurance product through qualified advisers.
The tax deductibility of risk advice and product should only be available if the individual receives the advice via a documented and personal advice process and through an Authorised Representative.It should not be tax deductible if the product is purchased online, directly or without documented and personal advice provided.

are product MER's tax deductible? I can't see why they are not, fees paid for the production of taxable income, and yet I'm not sure all accountants pick it up or if there is a ruling?

MER/ICRs are usually deducted before the return is declared to the investor. This reduces the amount of taxable income to the investor, so you don't claim them again in any way.

Since most returns are provided after fees I would think that it would all work out the same in the long run.

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