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SMSF Tax Deductions: What You Can (and Can't) Claim

SMSF Tax Deductions: What You Can (and Can't) Claim

Managing your own super fund means keeping your finger on the pulse, not just when it comes to investments, but also compliance. One of the most misunderstood areas for SMSF trustees is tax deductibility.

Yes, your SMSF can claim deductions. But no, that doesn't mean anything goes.

 

The Golden Rule: There Must Be a Clear Link to Income

For an expense to be deductible, it needs to directly relate to producing or managing the fund’s assessable income. If it doesn’t support the income-earning purpose of the fund, it won’t fly with the ATO, no matter how ‘reasonable’ it might seem.

 

What Expenses Are Deductible?

Here’s a breakdown of commonly accepted SMSF deductions:

You can generally claim:

  • Life and disability insurance premiums paid by the SMSF
  • Accounting and audit fees for annual fund compliance
  • Ongoing investment advice (not initial set-up advice)
  • Admin service fees to keep things running smoothly
  • Property management costs, including repairs and agent fees
  • Annual ATO lodgement fees
  • Out-of-pocket costs for trustees performing official duties (e.g. travel)
  • Actuarial and valuation fees
  • Bank charges and investment management fees

These are all considered legitimate because they’re essential to the ongoing operation and income generation of the fund.

 

What Expenses Aren’t Deductible?

Unfortunately, not everything qualifies, even if it feels related to the fund.

You can’t claim:

  • Costs of setting up your SMSF
  • Initial investment purchases
  • Upfront financial planning advice (like choosing investments at setup)
  • Penalties issued by the ATO or ASIC
  • Amendments to the trust deed, unless directly tied to compliance

 

Watch Out for These Common Traps

Even if an expense seems related to managing your SMSF, it won’t be deductible if:

  • It’s capital in nature (e.g. buying an asset)
  • It relates to private, personal, or domestic use
  • It’s tied to exempt income (like funds in the pension phase)
  • It’s expressly prohibited by tax law (like bribes or fines)

In other words, the ATO doesn’t just want to know what you spent. They want to know why you spent it.

 

Need a Hand with SMSF Tax Deductions?

Keeping your SMSF compliant and tax-efficient doesn’t need to be a headache. Our SMSF specialists can help you understand what’s deductible, what’s not, and how to keep your fund running smoothly.

Contact the tax experts at Paris Financial today on (03) 8393 1000 if you’re unsure what your SMSF can claim.

 

Source: Australian Taxation Office – SMSF Tax Deductions


Tags: Self Managed Superannuation Fund |