Is the fee you pay for the advice provided to you by a financial planner or adviser tax deductible for you? And which part? First charge paid for preparation of the plan? The second for the ongoing service? Both or none?

This appears to be a gray area and even today if you ask an accountant, you might get different answers from different specialists. So our topic for today is: Are the fees you pay for the financial planning service tax deductible or not?

As a general rule, there is no tax-deduction available for the preparation of advice documents, and there is no allowance for the tax deduction for ongoing service. Sometimes however, there are exceptions.  If the advice includes the income-producing assets and your planner breaks down advice costs to list on the invoice the amount of work dedicated to the issue of those income-producing assets, then that portion could be tax-deductible, but as you can appreciate, this is lots of hard work.

It should not be that difficult and the fee treatment should really get a uniformed treatment, and not be subject to the interpretation of possible manipulation of figures. The federal government is now investigating the rule contained in Tax Determination 95/60. By introducing the possibility of the full tax deduction of all advice fees for financial planning, it would make the service so much more affordable to many clients, especially when speaking of the ongoing service fees, which should be treated the same as fees to manage tax affairs, therefore fully tax-deductible. 


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