Private ruling: Deductions - financial advice fees
Date of advice: 16 August 2016
Published: September 2016
Ruling period: Year ending 30 June 2016
Date scheme commenced: 1 July 2015

Ruling: Q1: Are you entitled to a deduction for your financial advice fees? | A1: Yes.

Relevant facts and circumstances: You received financial planning advice from a licenced financial planner. You paid to engage the third party financial planner during the relevant financial year. You have sought financial advice to review your current financial investments and for advice to be provided on continuing management of your current investments.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1. | Income Tax Assessment Act 1997 Section 25-5.

Reasons for decision: Summary: Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for all losses and outgoings to the extent to which they are incurred in gaining or producing assessable income except where the outgoings are of a capital, private or domestic nature. Taxation Determination TD 95/60 states that where a taxpayer has existing investments and goes to an investment advisor to draw up an investment plan, the fee paid would be a capital outlay even if some or all of the pre-existing investments were maintained as part of the plan. The character of the outgoing is not altered because the existing investments fit in with the plan. It is still an outgoing of a capital nature. However, where financial advice is sought in relation to an existing investment plan and the advice is a review of that plan, the cost of the advice would be deductible. An ongoing management fee paid to advisers, or costs of servicing and managing an existing investment portfolio are generally an allowable deduction under section 8-1 of the ITAA 1997 if they relate to income producing investments (Taxation Ruling IT 39). In your case, the fees paid for your financial planning advice are deductible under section 8-1 of the ITAA 1997 as they are regarded as being incurred in gaining or producing your assessable income and they relate to a review of an existing investment plan.