Many people are curious as to whether the fees their financial advisor charges can be claimed in their tax returns. Financial advice’s tax deductibility has long been a significant concern for investors, and the majority of individuals want clear guidelines on which advisory expenditures they may and cannot deduct from their taxes.

Is It Possible to Claim Financial Advice in Tax Returns? 

In general, you’re eligible to deduct the fees you pay for financial advice from your taxes if the advice you get results in an investment that generates assessable income or is closely linked to one. Also, if the advice expense is in relation to ongoing advice for an existing portfolio, then the expenses may be deductible. 

When You Can Claim Financial Advice in Your Tax Return

There are no particular regulations regarding the deduction of financial advising fees; thus, these expenses are covered under standard deduction laws. According to these regulations, you are entitled to a tax deduction for any costs incurred in acquiring or producing income that’s subject to taxation. But where does that leave the costs for financial advice? 

Creating a Financial Strategy or Investment Portfolio

As a capital cost, this cannot be deducted from taxes. A Tax Determination (TD 95/60) issued by the Australian Taxation Office (ATO) claims that there’s an inadequate correlation between making investments and profiting from such investments. 

Management and Retainer Costs of an Investment Portfolio Already in Place

Tax deductions are available for the costs of maintaining an existing investment portfolio that received financial guidance. The fees must, however, be connected to producing money in order to be completely deductible. This implies that only a portion of the costs will be deductible if the advice refers to goods that don’t generate an income. 

Fees That Are Not Tax Deductible

Since these have nothing to do with creating taxable income, you cannot claim these fees charged by a financial advisor: 

  • Financial plan preparation 
  • Upfront fees 
  • Advice regarding non-assessable pension income 
  • Initial investment advice and general financial advice. 

These fees have yet to make a contribution to your annual taxable income.

We at Perth Mobile Tax pride ourselves on our dedication and attention to detail. Our group of specialists are qualified CPA experts committed to helping make your tax issues simple and effortless. Get in touch with us today to start working towards your tax obligations.

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