Is a Financial Advisor Tax Deductible for Businesses?

Hiring a financial advisor can be a smart move for small businesses. Whether you’re making big decisions or planning for tax time, sound financial advice can help you stay on track.

But is a financial advisor tax deductible? In many cases, yes—especially when the advice is tied to your business operations. In this article, we’ll explain when financial advisor fees are tax deductible and what counts as eligible advice. We’ll also explain how to claim these deductions correctly under Australian tax law and how to find expert advice.

What types of financial advice are tax deductible?

Not all financial advice is treated equally at tax time. The Australian Taxation Office (ATO) sets out clear rules about what advice qualifies for deductions. Here’s a quick breakdown:

These rules help clarify when you can claim tax deduction for financial advisor fees (and when you can’t). For more information, check out the ATO’s guide to financial advice fees.

How to claim tax deductions for financial advice fees

If your business has received professional advice, you’ll need to follow the proper steps to claim a tax deduction for the fees you paid. Here’s how:

• Keep detailed records of the advice received: Make sure you have written documentation showing that the advice was related to your business. The ATO may request proof that it wasn't personal in nature.

• Include the deduction in your business tax return: Use the correct ATO forms when completing your annual tax return. Advisor fees should be listed as part of your business operating expenses.

• Use a registered tax agent: A tax agent can help make sure you’re claiming eligible expenses correctly. They’ll also stay up to date with the latest rules around whether fees for financial advisors are tax deductible.

• Get tailored advice through a ProAdvisor: Not sure what qualifies as deductible advice? Find an accountant near you who can guide you through the process and help maximise your deductions.

Eligibility criteria for deducting financial advice fees

So, when is a financial advisor tax deductible?

Not all advice qualifies, even if it seems business-related. To make sure your financial advisor fees are tax deductible, you need to meet a few important criteria set out by the Australian Taxation Office (ATO).

Here are the main conditions to keep in mind:

1. Direct connection to business income: The advice must be directly related to earning your business income. If you're wondering "are financial advisors tax deductible?"—they are when their advice helps your business generate revenue.
2. Current business operations: The expense must relate to your current business, not a potential future business.
3. Proper documentation: You must have proper receipts and evidence showing the nature of the advice.
4. Timing of advice: The advice must be for the financial year in which you're claiming. Deductions for advisor fees cannot be carried forward to future years.

Common misconceptions about financial advisor deductions

Many business owners make mistakes when claiming tax deductions for financial advice. Let’s unpack some important points to keep in mind:

• Not all financial advice is deductible: Some business owners assume any financial advisor tax deduction is valid. In reality, only advice related to producing business income is deductible. Personal financial planning, even for business owners, is typically not deductible.

• Upfront fees for investment products: Many businesses incorrectly believe that fees for financial advisors are tax deductible when they relate to investment setup costs. These should usually be classified as capital costs, not tax deductible expenses.

• Ongoing service fees vs specific advice: Fees for regular business advice might be deductible, but specific advice for personal investments typically isn't.
• Mixed invoices: Some businesses try to claim the entire invoice when only part of the financial advice relates to their operations. Remember—these fees are only deductible for advice that applies to your business.

Record keeping for financial advice deductions

Good record keeping is key when claiming financial advisor tax deductions. Be sure to keep a hold of these documents:

• Invoices
• Receipts
• Contracts

These will clearly show what services were provided and when. They should also include how much you paid. Keep every document for at least five years, as the ATO may request this information during an audit.

It's also wise to take notes about how the advice relates to your business operations. This adds credibility to the financial advisor fees tax deductible on your return.

 Maximise tax deductions from financial advisors

Don’t leave money on the table. By working with a registered tax professional, you can make sure your claims are legitimate and optimised for your specific situation. The right support can also help you avoid common pitfalls, like claiming personal financial advice or overlooking eligible expenses.

Need expert help? Find an accountant near you through the QuickBooks ProAdvisor network. Or take control of your deductions with accounting software for small businesses that helps you track expenses and organise records all in one place.