The IPA’s call, made in the institute's Budget submission, follows the recent release of the government’s Intergenerational Report, which revealed there will be just 2.7 working Australians to support every Australian over the age of 65 by 2055.
IPA chief executive Andrew Conway said competent and affordable financial advice will be an essential ingredient in paving the way to sustainable retirement incomes and to helping alleviate over-reliance on government-funded pensions.
“Allowing Australians to claim a tax deduction on financial advice will ensure better retirement outcomes and keep advice accessible and affordable," Mr Conway said.
“The IPA believes there is a strong case to support the tax deductibility of all of the costs of financial planning advice."
Mr Conway said changes to conflicted remuneration arrangements and the introduction of the best interests duty for the financial advice sector under the FOFA reforms only strengthen the case for the provision of deductible financial advice.
“Currently, a fee for service arrangement for the preparation of an initial financial plan is not tax deductible as it is not considered to be an expense incurred in producing assessable income,” he said.
“The cost to Government will not be significant as these costs were previously fully deductible as commissions when paid to the financial planner.
“The tax deductibility of financial advice would considerably increase financial literacy, boost affordability and accessibility and reduce demands on public funding. It would encourage a larger number of Australians to seek financial advice.
"The costs of a capped tax deductibility limit for financial planning advice will be significantly outweighed by the longer term benefits of assistance provided to tax payers as they plan for independent retirement,” Mr Conway said.