What Tax Deductions can your SMSF Make?
Whether or not expenses are deductible is largely about common sense. If the investment is allowable under the Superannuation Industry Supervision (SIS) Act, or the cost is genuine in running your fund, then chances are, it is a deductible expense. It’s actually as much about remembering to record such expenses so that you can make the claim.
You can get a comprehensive list from the ATO, but here’s a list of the most common that you should be ensuring that you are retaining records for and claiming, that is assuming you are in Accumulation phase and therefore paying tax!
- Bank Charges
- Valuation and storage costs of collectible assets (as long as income producing)
- Depreciation on plant and equipment
- Interest on investment loans
- Actuarial costs (relating to pension funds)
- Accountancy/Greenlight Fees
- Audit Fees
- Trust Deed Updates
- Insurance Premiums
- Investment adviser fees
- Subscriptions for membership that assist you to run your fund such as Research Fees, Education Programs
- Fines
- Costs in connection with the calculation and payment of benefits to members, eg some Greenlight Consultancy Fees, medical costs in assessing invalidity claims
- A range of other Property related deductions – see below
Tips and Traps:
- Make sure the invoice is made out to the Super Fund
- Wherever possible, pay the expense directly from the Super Fund bank account
- Watch paying expenses from your own bank account or company bank account as they could be deemed a loan to your fund, or a contribution.
Property Related Deductions
First up, you need to consider whether an expense is in fact a deductible expense against the taxable income of the fund, or a capital cost. Capital costs include things like:
- In-ground swimming poos, saunas, spas
- Major work renovations
- Replacement of plumbing and gas fittings
- Garage doors, skylights
These things won’t be tax deductions per se, but need to be added to the cost base for valuation purposes, and can be depreciated.
However where costs are incurred in the process of earning an income, these expenses should be recorded and claimed as per above. Examples include:
- Advertising
- Body Corporate Fees, Rates,
- Energy and Water Bills (only if paid by you rather than the tenant)
- Land tax
- Cleaning, mowing, gardening, repairs and maintenance
- Insurances
- Property Management Fees
- Security patrol fees
- Travel expenses when inspecting the property (though you need to apportion any personal travel costs)
- Stationery, postage, telephone
Additionally, items that are furniture, fixture or fittings (not part of the building) that are part of the income production, these can be depreciated over 1-20 years.
For information about how to make the administration of your fund and its expenses more streamlined throughout the year, keep an eye out for some upcoming Administration Tips on the website or chat to Danielle or Vanessa today!
