Understanding the Tax Deductibility of Financial Advice Fees
When preparing your tax return, you might wonder whether the fees you pay your financial adviser are tax-deductible. The answer? Yes— but with limitations. The Australian Taxation Office has recently clarified which financial advice fees can be claimed as deductions.
Which Financial Advice Fees Are Deductible?
You can claim a deduction for financial advice fees if they are incurred in the course of gaining or producing assessable income. Examples of deductible fees include:
- Tax-related advice – fees for managing your tax affairs, such as salary sacrifice strategies or how tax laws apply to your investments.
- Ongoing investment management fees – typically, these are recurring fees (e.g., annual or semi-annual).
- Advice on existing investments – including the suitability and performance of your current investment portfolio.
- Income protection insurance advice – but only for policies that cover lost income (not life or trauma insurance).
Financial Advice Fees Paid Through Super
To claim a deduction, you must have personally paid the financial advice fees. If your super fund paid the fees, you cannot claim them, as deductions in this case are only available to the fund itself—not the member or adviser.
Which Financial Advice Fees Are Not Deductible?
You cannot claim a deduction for financial advice fees that relate to:
- New financial advisory engagements – fees for your first meeting with an adviser or initial advice on a proposed investment.
- Investment expansion – advice on investing additional funds to grow your portfolio.
- Non-deductible insurance policies – including life, total and permanent disability (TPD), and trauma insurance.
- Personal expenses – such as household budgeting, which is considered private in nature.
The Importance of Itemised Invoices
To successfully claim a deduction, your financial adviser must provide a detailed, itemised invoice. This should clearly separate deductible expenses (e.g., managing tax affairs) from non-deductible expenses (e.g., capital outgoings) on a fair and reasonable basis.
Seek advice
Understanding what qualifies as a deductible financial advice fee can be complex. To maximise your eligible deductions, seek professional advice tailored to your circumstances.