Also, the IRD has moved away from an earlier approach it adopted which involved classifying investors into three categories, namely passive, speculative and business investors.

This time around the department is saying that the key issue is whether or not an adviser is supplying a "financial service", as defined by legislation.

"The crucial point that determines the gst treatment is for what service(s) the fee is actually paid.

"The nature of the service provided will determine whether the fees paid are for a supply of a "financial service" and thus an exempt supply, or otherwise qualify as a supply of services exempt from gst."

One of the key features of the document is that the IRD broken the financial planning process down into seven categories, as opposed to three.

These categories have been established to better clarify what each type of fee is.

In the recently released discussion document IRD says "the gst treatment of the fees depends not on the name given to the service, but to the nature of the service. To determine the correct tax treatment of a service, it is important to identify the exact service a financial advisor provides."

The seven fee categories are:

• Initial planning fees
• Implementation fees
• Administration fees
• Monitoring fees
• Evaluation fees
• Re-planning fees
• Switching fees.

A full copy of the discussion document can be found in the Features section