If you pay your advice fees directly from a super or investment platform, GST will be collected differently from 1 July.
Who is impacted?
Clients who are paying advice fees directly from superannuation or investment accounts. This is not relevant for anyone paying advice fees from a bank account.
What is the new ATO guidance?
In December 2023, the Australian Taxation Office (ATO) issued new guidance that Superannuation Funds and Investment platforms cannot claim reduced input tax credits (RITC) for adviser service fees. This means that they will have to pay the full amount of GST on these fees, without any offsetting benefit. Superannuation Funds and Investment platforms are expected to comply with the ATO’s guidance, from 1 July 2024.
How will this change affect you?
This change will affect the amount of adviser service fees that you pay from your account. Currently, if you agree to pay an adviser service fee that includes GST, the platform or fund can claim RITC for up to 75% of the GST amount and pass on the benefit to you. This reduces the amount of fee that you pay from your account. However, from 1 July 2024, the platform or fund will not be able to claim RITC.
How the change can impact adviser service fees
NB: This example is for illustrative purposes only.
Currently, if you agree to pay an adviser service fee of $11,000 (including $1,000 GST), the platform or fund can claim RITC of $750 and pass the benefit on to you. The fee that you pay from your account will then be $10,250.
Once the above change comes into effect, the same adviser service fee of $11,000 (including $1,000 GST) paid from your account will be $11,000. Please see a detailed breakdown of this example below.
| Adviser Service fee breakdown | Current state | Future state |
| Adviser service fee excluding GST | $10,000 | $10,000 |
| GST amount (10%) | $1,000 | $1,000 |
| Adviser service fee including GST (amount paid to the adviser) | $11,000 | $11,000 |
| RITC rate (7.5%) | 75% | 0% |
| RITC benefit passed on to the member | ($750) | $0 |
| Adviser Service fee amount paid from the member’s account: | $10,250 | $11,000 |