I had an interesting one this week.
A client asked whether the fee they paid for financial advice was tax deductible. Nothing unusual there. It’s a question I get reasonably often.
The client did exactly what they should do and asked their accountant. The accountant came back and basically said, “we’ve fought the ATO on these before and we’re reluctant to claim it.”
To be fair, that wasn’t a surprising response. For years financial planning fees sat in a bit of a grey area and the safest answer was often just to assume they weren’t deductible.
The funny thing was, I thought the rules had changed.
Not being a tax adviser, I wasn’t about to argue with an accountant, but something didn’t quite sit right. I was reasonably sure there had been updated guidance from the ATO that made things a little clearer than they used to be.
So I started digging.
I reached out to a former colleague who had actually been involved in an industry working group that spent years trying to get greater clarity around the deductibility of financial advice fees.
His response was pretty straightforward.
The information many people are relying on today is often based on the old interpretation of the rules. The more recent ATO guidance of both TD 2024/7 & s. 25-5 and s. 8-1 ITAA 1997, allows for some financial planning fees to be deductible, particularly where they relate to tax advice provided by a qualified adviser.
Importantly, it doesn’t mean the whole fee is automatically deductible.
It means there may be a deductible component.
That’s where things get a bit technical and why accountants quite rightly want supporting information rather than just taking someone’s word for it.
After going backwards and forwards and providing some additional information, I got a phone call from the accountant.
What surprised me wasn’t the tax discussion.
He actually rang to thank me for taking the time to chase it up.
His comment was that many advisers would have just accepted the initial answer and moved on. Instead, I’d gone looking for clarification because I genuinely wanted to make sure the client received the correct outcome.
Now, I’m not telling this story because I want a pat on the back.
The reality is I learned something as well.
One of the things I enjoy most about financial advice is that you never stop learning. Tax rules change. Superannuation rules change. Centrelink rules change. Sometimes things you believed were true five years ago simply aren’t true today.
What this experience reinforced for me is the importance of not accepting the first answer if something doesn’t feel quite right.
Sometimes the answer is still no.
Sometimes it’s yes.
And sometimes the real answer sits somewhere in the middle.
If nothing else, it was a good reminder that Google, AI searches and even experienced professionals can occasionally be working off old information.
That’s why asking one more question can sometimes be worth thousands of dollars.
