The Financial Planning Association (FPA) says initial financial plans and ongoing management fees or retainers should be tax deductible.

In a pre-budget submission to the Federal Government, it says the Tax Office does not consider preparation of a financial plan to be deductible.

Research commissioned by the FPA shows 30% of people who have not sought financial advice cite high costs as a key reason.

FPA Head of Policy and Government Relations Ben Marshan says increasing the number of people receiving advice will help reduce the overall cost of providing the service.

“To support our proposal, the FPA recommends the Government engage the Productivity

Commission to examine the short-term and long-term position of the budget if the preparation of an initial financial plan and ongoing fees were tax deductible,” he said.

“This report should be robust to a variety of different solutions, such as means-tested or capped tax deductions.”

Mr Marshan says the Tax Office’s current stance is a disincentive to seek advice.

“This has widespread cost implications, both for the individuals and the community as a whole. Encouraging the use of professional financial planning services results in a more financially literate community, and benefits society overall.”