SMSF practitioners may be able to offer their clients some extra opportunities to deduct financial advice fees due to parts of superannuation law relevant to the sector falling under the jurisdiction of the commissioner of taxation, according to the Financial Advice Association Australia (FAAA).
Under a recent ATO taxation determination (TD), financial advice fees that relate to managing tax affairs can be deductible. This includes tax (financial) advice provided by a recognised tax adviser, including a qualified tax relevant provider.
“Where you provide tax financial advice for your client, then the fee related to that tax financial advice would be deductible to your client. Understanding what tax financial advice is revolves around also understanding what is a taxation law,” FAAA policy and advocacy senior manager David Barrett told attendees of a webinar on TD 2024/7, which relates to financial advice fee deductibility.
Barrett pointed out the tax commissioner also has general administration responsibilities for parts of the Superannuation Industry (Supervision) (SIS) Act 1993, but generally only to the extent the provisions relate to SMSFs in Part 3 covering payment and contribution standards, Part 6 regarding governing rules, covenants and death benefit nominations, Part 7 dealing with the sole purpose test and Part 8 referencing the in-house assets and arm’s-length rules.
“The commissioner’s responsibilities only relate to the [above] provisions to the extent that they relate to self-managed super funds,” Barrett said.
“For example, advising a client about whether or not a super fund can accept a super contribution on behalf of your client because of age criteria, et cetera, that would be covered by SIS if it’s in relation to a self-managed super fund, that advice would be deductible. If it was in relation to an APRA (Australian Prudential Regulation Authority)-regulated fund, it would not be deductible.
“Advice about the governing rules with the SIS covenants, the death benefit nomination rules, the sole purpose tests … the in-house asset tests and arm’s-length rules, any advice in relation to self-managed super funds in those categories would be tax financial advice and hence deductible.”
Advisers need to apportion how much of their fee relates to tax advice and itemise accordingly in invoices. The FAAA and professional accounting bodies released guidelines as to how this can be done last week.
