Tax Deductibility of Financial Advice Fees

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Tax deductible financial advice fees

In September 2024, the ATO released an updated ruling* about how financial advice fees are treated for tax purposes, however how to apply and divide the fee can be complex. In 2025, FAAA** released a guide about how to calculate the deductible portion.

Key Points:

• When are financial advice fees deductible?

• Financial advice is rarely fully tax deductible as it usually involves more than just tax advice;

• Fees may be deductible if you receive tax financial advice ie if the advice is about producing assessable income or managing tax affairs.

• Examples of advice that may be deductible

• Superannuation contribution and pension strategies

• Establishing and maintaining SMSF’s

• Personal Insurances within or outside super

• Gearing and investment structuring for tax purposes

• Estate planning and debt reduction with tax strategies

• Important details:

  • Fees paid from superannuation funds are not deductible by the individual since they are not directly paid by the taxpayer.

  • Fees paid from other investment vehicles might be deductible depending on contracts.

  • Couples must apportion fees appropriately before claiming deductions.

  • The ATO ruling applies only to personal advice, and not to business entities eg companies or trusts.

  !! Important - Record Keeping:
  You and your adviser must keep detailed records beyond just Statements of Advice, and strategies considered but not recommended.

Background:
*Australian Tax Office ( ATO) TD 2024/7 replaces the old 30-year-old TD 95/60, updating rules on when financial advice fees can be claimed as tax deductions.

**On 23 May 2025, the Financial Advice Association of Australia (FAAA), together with leading accounting bodies, released a practical Guide to help advisers and clients understand how to calculate the deductible portion of financial advice fees properly

Relevant Tax Law Sections:

• Section 8-1: Deduction for fees incurred in producing assessable income (e.g., investment advice).

• Section 25-5: Deduction for fees related to managing tax affairs (e.g., tax planning, superannuation, CGT strategies).This guide aims to help advisers and taxpayers understand and apply the rules correctly under the updated tax determination for financial advice fees.

Really important : What will you do with any deduction?

TIP: Paying off your non tax-deductible debt first will help get you debt-free and saving faster!

Next steps

Call us for a quick chat or drop us a line for advice about your financial plans and what tax deductions may apply

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