Financial advice must be made tax deductible, the Commonwealth Bank has said in its 132-page submission to the Murray inquiry.
The submission to David Murray, the head of the Abbott Government’s financial systems inquiry and a former Commonwealth Bank boss himself, focused heavily on making the Australian superannuation system more sustainable.
Many Australian’s are not retiring comfortably with a superannuation guarantee contribution (SGC) of 9%, which is low by international standards and “well below” average OECD replacement rates, the submission said.
Instead it should be increased to a minimum of 12%.
And to further increase the likelihood of Australians having an adequate retirement they must have access to quality and affordable financial advice, it said.
“The Financial Services Council (FSC) and others have previously highlighted the distortion that arises from the tax treatment of fees paid for financial advice,” the bank wrote. “Commonwealth Bank recommends making the cost of financial advice tax deductible for consumers and unify tax treatments for different payment of financial advice.”
The FPA has also previously urged
the government to consider making financial advice tax deductible in its submission to the Federal Budget.
“The inability to claim a tax deduction for the fees associated with an initial financial plan acts as a disincentive for people to take the first step towards organising their finances on a strategic basis,” it stated.
“Specifically allowing initial advice fees to be tax deductible would greatly assist consumers’ access to affordable financial advice that is beyond mere income tax or of a superannuation nature.”
At the time of the submission, Assistant Treasurer Senator Arthur Sinodinos – now stood down in the wake of a major corruption case – dismissed any plans to make financial advice tax deductible.
reported that in justifying his position to leave the idea out of the FoFa amendments, he stated: “Making the financial advice services tax-deductible was an initiative that was not a possibility in the current fiscal climate.”
Eyes will now be on Sinodinos’ replacement senator Mathias Cormann who last week called a halt to the FoFA amendments, or financial systems inquiry head Murray; both of whom may see things differently.