Self-Managed Super Funds (SMSFs) are a type of superannuation fund that allows individuals to manage their retirement savings. One of the benefits of having an SMSF is the ability to claim tax deductions on certain expenses. In this guide, we will cover the essential aspects of SMSF deductions.
What expenses can an SMSF claim as a tax deduction?
SMSFs can claim tax deductions on a range of expenses that are incurred in the process of managing and administering the fund.
These expenses include:
- Accounting and audit fees: SMSFs are required to have their financial statements audited each year, and they can claim a deduction for the cost of the audit as well as any accounting fees incurred.
- Investment expenses: SMSFs can claim a deduction for expenses related to the management of investments, such as brokerage fees, investment advisory fees, and custodian fees.
- Administration expenses: SMSFs can claim a deduction for expenses related to the administration of the fund, such as legal fees, insurance premiums, and bank fees.
- Superannuation regulator fees: SMSFs are required to pay an annual supervisory levy to the Australian Taxation Office (ATO) and can claim a deduction for this expense.
What expenses cannot be claimed as a tax deduction?
There are some expenses that SMSFs cannot claim as a tax deduction, including:
- Expenses incurred before the SMSF was established: SMSFs can only claim tax deductions on expenses that are incurred after the fund has been established.
- Personal expenses: SMSFs cannot claim tax deductions on expenses that are of a personal nature, such as travel expenses for fund members or trustees.
- Non-compliant expenses: SMSFs cannot claim tax deductions on expenses that are not compliant with the Superannuation Industry (Supervision) Act 1993 (SIS Act) and the Superannuation Industry (Supervision) Regulations 1994 (SIS Regulations).
How are SMSF deductions claimed?
SMSFs can claim tax deductions by including the relevant expenses on their annual tax return. The SMSF must keep accurate records of all expenses claimed as tax deductions, including invoices, receipts, and bank statements. It is important to note that SMSFs cannot claim a tax deduction for any expenses that have been reimbursed by the fund.
Claiming tax deductions on expenses is one of the benefits of having an SMSF. However, it is important to understand which expenses are deductible and which are not, and to keep accurate records of all expenses incurred. If you are unsure about whether an expense is deductible, it is advisable to seek professional advice from a financial adviser or SMSF specialist.