Australia’s financial services sector will continue to push for financial advice to be tax deductible despite the government stating it is not on their immediate agenda.
The Minister for Financial Services and Superannuation Bill Shorten announced earlier this week that providing such a tax advantage is not a priority.
“That’s not on the table to begin with and I wouldn’t want you to think that is where we are at. We have no plans to do that at this stage,” Shorten told an audience at an FPA lunch earlier this week.
Shorten’s comments have concerned many within the industry who believe such a stance does little to close Australia’s financial advice gap.
Financial Services Council chief John Brogden said he was disappointed but not surprised by Shorten’s statement.
Brogden said Australians planning for their financial future is as important as people getting their tax returns correct, and just as there is tax deductibility for tax returns financial advice should also be tax deductible.
“We’re going to keep fighting. In one sense I’m grateful he [Shorten] was blunt. At least we know where he stands. At least we know what the size of the battle is,” he said.
“We will continue to fight for this because we believe it is one of the most significant single levers to increase people taking financial advice.”
FPA policy and government relations general manager Dante De Gori said while Shorten talked about reducing barriers to allow simpler advice be provided more easily, the lack of a tax deducibility option means the Minister has only solved part of the problem.
“The other half is how do you encourage Australians to actually seek advice and that’s where think the ability to pay for advice is part of that,” De Gori said.
“We are disappointed that the minister did say it’s basically off the table. We are conscious of the Government’s overall budgetary position so we weren’t expecting the Government to come out and give us a tick for tax deductibility today but we were expecting it was on the agenda when it was appropriate,” he said.
He said the FPA has put forward a number of options to the government to achieve greater access to advice including tax deductibility of up-front advice as well as using salary sacrifice to cover the cost of advice.
Association of Financial Advisers chief executive Richard Klipin said tax deductibility of advice is a key option.
“Advice is now a proven value to consumers who get advice. The best way to incentivised behaviour is to provide levers through the taxation system and tax deductibility of advice is clearly one of the key options,” Klipin said.
