FAAA reminds ATO on general advice payment rules | Australian Markets

The Australian Taxation Workplace (ATO) has been reminded that it isn’t doable for superannuation funds to instantly charge members for the supply of common advice.

The reminder has come from the Monetary Recommendation Affiliation of Australia (FAAA) as half of the organisation’s response to the ATO’s draft compliance steering round Charges for Monetary Recommendation Paid from Member Accounts by Superannuation Funds.

Whereas the FAA welcomed the ATO draft steering, it identified a quantity of shortcomings together with with respect to common advice provision.

The FAAA mentioned it recognises the significance for members of superannuation funds to have the ability to entry financial advice and declare a tax deduction for financial advice charges paid from their account.

“In the context of the passing of the Delivering Better Financial Outcomes Tranche 1 Bill in July 2024, the provision of this guideline is both necessary and important,” it mentioned.

“We imagine that the place taken within the draft PCG presents a sensible method and must be comparatively simple to implement.

“Whilst we support the practical approach taken in paragraph 25, it is important to make the point that some members of superannuation funds who have met a condition of release and have commenced a retirement phase product, may continue to work and as a result also maintain an accumulation phase product,” it mentioned.

“While charges charged to their retirement part product wouldn’t be deductible, charges charged to their accumulation part product must be deductible. We imagine that this may be the meant end result on this draft PCG.“

“We support both the choice to apply this approach in any year, the ability to change that choice in later years and the fact that this choice must apply to all advice fees paid in that year. That is a practical position to have taken.”

Nonetheless, in different suggestions, the FAAA famous that a footnote prompt that “Funds may also charge a fee for general advice, as defined in that section, against members’ accounts”.

“We do not believe that this is technically correct. Whilst it is possible to collectively charge members for the cost of personal financial advice as part of the member fee (i.e. Section 99F of the SIS Act) and for the cost of the provision of general advice to be incorporated within a member fee, it is not possible to directly charge members for general advice. It might be appropriate to add the words “indirectly as part of a membership fee” previous to “charge,” the FAAA mentioned.