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Taxable expenses under my SMSF

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Newbie

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Have recently set up my SMSF (2 personal Trustees) and simply opened a Nabtrading account structure to deal in shares and hold cash in their high interest account. The fund is presently in pension phase (both retired). 1. Upon my tax return (No Tax) I will advise of all the exps associated with setting up and running. Will these simply be refunded in full? 2. My NAB Trading structure has a cash account for transactions but no Debit Card  or Cheque book access ..... how do I pay for tax deductable items running the fund so as to id receipts as that of the SMSF or can I pay from a personal account and note as a reimbursement as part of my drawings or will I need to open a separate bank trading account and if so what bank offers Debit Card access ?

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ATO Certified

Anonymous

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1/ SMSF set up costs - 

 

First of all you can not claim any expenses that relate to the SMSF, including setting up costs, against your own personal income tax.

 

Costs associated with setting up an SMSF are considered to be capital in nature and not an allowable deduction and therefore the SMSF can not claim these as a deduction.

 

Running costs of an SMSF in general are allowable and can be claimed by an SMSF except if they are incurred in deriving non-assessable income or are capital, private or domestic in nature. Refer - SMSF-deductibility-of-expenses  TR93/17

 

If a complying self-managed super fund (SMSF) earns income from assets held to provide for pensions is exempt from income tax. This is called exempt current pension income (ECPI).     Then it will not be able to claim any expenses against the ECPI.

Refer - Exempt-current-pension-income smsf tax-exemptions-on-pension-assets

 

2/ SMSF reimburseing trustee.

 

Self Managed Super Fund Ruling SMSFR2008/2 states 

" Example 15 considers a case where expenses are reimbursed from SMSF funds. It is a requirement of being an SMSF that no SMSF trustee or director of a corporate SMSF trustee receives any remuneration from the SMSF or from any other person for the performance of duties or services as trustee or director respectively.31 However, an SMSF trustee or director of a corporate SMSF trustee may have expenses that have been properly incurred in the performance of those duties reimbursed or paid out of the trust property. This right to indemnity does not extend to expenses incurred unnecessarily or improperly. "

 

So it may be possible, but you need to be very careful as the payment of an expense by a member can also be considered as a contribution if those expenses are not reimbursed.

 

The best approach is for an SMSF to set up their own account.

 

3/ Financial Institution 

 

You will have to make your own enquiries about which bank offers the type of product you are seeking as the ATO can not and does not make recommendations of financial institutions or their products.

 

If you need further assitance you can contact the ATO on 13 10 20 or you can apply for SMSF-specific-advice

 

 

 

 

1 REPLY 1
Highlighted

Best answer

ATO Certified

Anonymous

Replies 0

1/ SMSF set up costs - 

 

First of all you can not claim any expenses that relate to the SMSF, including setting up costs, against your own personal income tax.

 

Costs associated with setting up an SMSF are considered to be capital in nature and not an allowable deduction and therefore the SMSF can not claim these as a deduction.

 

Running costs of an SMSF in general are allowable and can be claimed by an SMSF except if they are incurred in deriving non-assessable income or are capital, private or domestic in nature. Refer - SMSF-deductibility-of-expenses  TR93/17

 

If a complying self-managed super fund (SMSF) earns income from assets held to provide for pensions is exempt from income tax. This is called exempt current pension income (ECPI).     Then it will not be able to claim any expenses against the ECPI.

Refer - Exempt-current-pension-income smsf tax-exemptions-on-pension-assets

 

2/ SMSF reimburseing trustee.

 

Self Managed Super Fund Ruling SMSFR2008/2 states 

" Example 15 considers a case where expenses are reimbursed from SMSF funds. It is a requirement of being an SMSF that no SMSF trustee or director of a corporate SMSF trustee receives any remuneration from the SMSF or from any other person for the performance of duties or services as trustee or director respectively.31 However, an SMSF trustee or director of a corporate SMSF trustee may have expenses that have been properly incurred in the performance of those duties reimbursed or paid out of the trust property. This right to indemnity does not extend to expenses incurred unnecessarily or improperly. "

 

So it may be possible, but you need to be very careful as the payment of an expense by a member can also be considered as a contribution if those expenses are not reimbursed.

 

The best approach is for an SMSF to set up their own account.

 

3/ Financial Institution 

 

You will have to make your own enquiries about which bank offers the type of product you are seeking as the ATO can not and does not make recommendations of financial institutions or their products.

 

If you need further assitance you can contact the ATO on 13 10 20 or you can apply for SMSF-specific-advice