Private ruling: Financial advice
Published: August 2012
Ruling period: Year ended 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Q1: Are you entitled to a deduction for financial advice? | A1: No.


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1

Reasons for decision: Summary: Section 8-1 of the Income Tax Assessment Act 1997 allows a deduction for all losses and outgoings to the extent to which they are incurred in gaining or producing your assessable income. However, a deduction is not allowed where the loss or outgoing is of a capital, private or domestic nature or incurred in relation to gaining exempt income. To determine whether a deduction is allowable for financial advice, the nature of the expense must be considered. The nature or character of the financial advice fees follows the advantage which is sought to be gained by incurring the expense. If the advantage to be gained is of a capital nature then the expense incurred in gaining the advantage will also be of a capital nature. Also if the expenses incurred relate to a separate entity, then no deduction is allowable. Your superfund is regarded as a separate entity for taxation purposes. The fee does not directly relate to your assessable income and therefore no deduction is allowable. Additionally, as the fee was deducted from the superfund account, you did not incur the expense. Rather, it was incurred by the superfund. The investments relating to your superfund produce no assessable income to you. The fact that you may earn assessable income from your superfund in the future does not alter the fact that the expenses relate to the superfund's investments and you did not incur the expense Therefore, you are not allowed a deduction.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet. | Relevant facts: You sought financial advice relating to transferring your superannuation from a different super account. | The payment of the fees was made from the superannuation account.