Offshore bonds and 5% tax deferred allowance

richallum

For post RDR bonds, which of the following would you say count towards the 5% allowance?

1. withdrawals
2. advice fees
3. bond product / platform fees
4. DFM fees

benjaminfabi

1. Yes if partial
2. Yes always
3. No never
4. Depends

richallum

Thanks @benjaminfabi can you expand on 4. Depends?

benjaminfabi

Depends on whether the bond provider is willing to classify the DIM fees as investment management fees, which are not treated as withdrawals because they're not advice fees.

I'm pretty sure Utmost will allow part of an adviser's OAC to be set against investment management if they're running an advisory MPS.

It's a weird quirk, but it is there.

richallum

Thanks. I'd go with 1, 2 always and 4 in rare cases but normal DIM not.

benjaminfabi

I'd leave it to the bond administrator to tell you how they do it as it's their decision and their obligation to report the chargeable event to the client.

Challenge them if you don't think they're doing it correctly, but if they don't agree, give the client inaccurate information, and a tax liability is later uncovered, they'll be liable.