The expenses considered deductible by super funds are similar to that of individuals. Essentially, it should be items that are losses or outgoings incurred while producing or gaining assessable income.
Unlike individuals, a self managed super fund can claim a tax deduction for life and disability insurance premiums.
The most vital thing to remember is that there must be a connection between the amount spent and the income earnt for expense to be considered tax deductible.
To make it simpler, below are some examples of what expenses are/are not deductible.
Expenses that are deductible include:
- costs of life insurance
- accounting fees
- audit fees.
- administration service fees
- costs of ongoing investment advice
- rental property costs such as agent fees and repairs
- annual lodgement fees
- trustees’ out-of-pocket costs required to discharge their duties, such as travel
- actuarial fees
- valuation fees
- bank charges
- investment management fees.
Expenses that are not deductible include:
- costs of setting up the SMSF
- purchase costs for an investment
- costs of initial financial planning advice when the fund is established and/or when investments are selected
- penalties imposed by the ATO and the Australian Securities & Investments Commission (ASIC)
- costs relating to certain deed amendments.
Also not deductible are any items that are:
- of a capital, private or domestic nature (the expense must always relate to producing the income)
- expenditure that is incurred in gaining or producing exempt income (usually because they are associated with investments allocated to the pension phase)
- there is something in the Income Tax Act that prevents a tax deduction (the cost of any fines or bribes).