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04 Mar 11 More on financial planners and tax advice


MEMBER 28 writes:

"Another case of a financial planner who can give tax advice but I cannot comment on super. Interestingly enough, the property purchased is somehow connected to this financial planner and if/when built will be managed by them. No conflict of interest here!!!! Best plan is buy from me, let me manage it for you etc.

'I am the financial advisor for our mutual client. I just wanted to clarify some questions regarding the tax deductibility of some of our fees, in order to avoid confusion in the future.

On...she paid $650 to us to draw up a complete financial plan for her. This was a one off cost, and payable for the purposes of drawing up a plan only. Our recommendations included the acquisition of a residential investment property, altering her financial structures, putting wills and powers of attorney in place and reviewing her personal insurance cover.

On...last year she paid $3,490 to us to implement every part of this financial plan, and as ongoing service fee. This provides her with ongoing reviews as frequently as needed for a 2 year period to monitor the performance of her investments and for us to put together new plans whenever there is a need for it.

Since then we have helped in the acquisition of an investment property, we obtained the finance for it and we act as the managing agent. I wanted to get a better understanding of your interpretation of the deductibility of this cost, as our understanding of it is that this $3,490 is a cost incurred in producing assessable income for her; namely rent for the property under tax determination TD 95/60.

Her property has just finished construction and we are in the process of finding a tenant. If you can clarify your interpretation on the deductibility of this that would be appreciated.'

They told her the $ 650 was deductible. I am under the impression that my client had been told that the $ 3,490 would all be deductible as well.

I agree whole heartedly with members 19 & 20 2011TAXVINE No.5 (18 February 2011). Member 24 2011 TAXVINE No.6 (25 February 2011) You are correct. It used to be 12 months than it went to 2 years, now it is again 12 months to become a tax agent. It is pathetic. If anything, 3 years should be the minimum. 20-25 years in public practice and I now realise how much I don't know."


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