What are your SMSF Tax-deductible Expenses?

Self-managed superannuation funds (SMSFs) are subject to clearly defined rules and regulations regarding tax-deductible expenses. While these rules are designed to ensure that SMSFs are operated for the sole purpose of providing retirement benefits to their members, SMSFs may claim tax deductions for certain expenses.

Generally, not all SMSF expenditure is tax-deductible and some capital expenses – cost of purchasing fund assets, for example – are tax-liable. Neither the cost of establishing a SMSF nor drawing up its trust deed may be claimed as tax deductions.

To be tax-deductible, expenses must be assumed in the endeavour of earning income for your SMSF, consistent with your SMSF’s investment strategy and permitted under its trust deed.

Here are some common expenses that you could claim as tax deductions for your SMSF, subject to Australian Taxation Office (ATO) approval:

• Trustee expenses incurred for such events as trustee training, trustee meetings and SMSF-relevant seminars.

• Administration fees for general operation of your SMSF, including collecting and processing member contributions.

• Investment management fees such as those paid to financial advisers, investment managers, lenders, and stockbrokers for managing your SMSF’s investments.

• Insurance premiums related directly to insuring your SMSF’s investments, and policy premiums paid on behalf of SMSF members for life or income protection insurance.

• Accounting and auditing fees incurred for the preparation of your SMSF’s financial statements, annual returns, and audits.

• Legal costs paid to legal counsel and legal representation related to the operation and compliance of your SMSF.

• Bank fees and charges associated with your SMSF’s bank accounts.

• Property management fees, if your SMSF owns property.

• Rental property costs on SMSF-owned rental property.

• Property repair and maintenance costs incurred on SMSF-owned property.

• Interest on loans used to purchase SMSF-owned property.

• Depreciation costs on investment assets, such as commercial property plant and equipment.

• Compliance costs such as ATO lodgement fees and statutory fees and levies.

SMSF trustees are responsible for keeping accurate records of all expenses and checking that those expenses meet the strict eligibility criteria for tax deductions, as it is crucial to comply with Australia’s taxation rules and regulations.

The process for claiming expenses and deductions occurs in your SMSF’s annual return and trustees should ensure that all receipts and invoices are in the fund’s name and are retained for at least five (5) years after being submitted to the ATO. Penalties – fines – are metered out by the ATO for non-compliance which may not be paid from the SMSF itself.

As the laws regarding SMSFs change over time, stay up to date by seeking advice from a taxation professional who can also advise you on your specific SMSF and maximise tax benefits for your beneficiaries and you within the legal framework.

How can YML help?

Talk to our YML Super Solutions Team today to see how YML Group can assist you with your SMSF tax deductions. For more information, view our website and contact us on (02) 8383 4444 or by using our Contact Us page on our website.

Australian Taxation Agents require Clients to provide Photo ID

Identity breaches by nefarious people in our widening technological world is cause for the Tax Practitioners Board’s requirement for tax practitioners to verify their clients’ identities with a form of photo identification. This means greater protection for you of your personal and financial information and transactions.

To mitigate devastating financial consequences affecting Australians and the Australian economy, the Tax Practitioner Board asks tax agents to ensure that they adequately authenticate their individual clients’ identities. To achieve this, clients must provide evidence to their tax agent, including a form of identification that contains a photograph.

What you need to provide to your tax agent?

As an Individual seeking to engage a registered tax practitioner in your own right, you are required to provide your Full Name plus either your Residential Address or your Date of Birth. To do this, you will need to show original documentation as evidence:

An original or certified copy of a primary photographic identification document; or BOTH of the following:

An original or certified copy of a primary non-photographic identification document; and

An original or certified copy of a secondary identification document.

YML Group – Your registered Tax Agent

At YML Group we value our clients and, as directed by the Tax Practitioners Board, we wish to protect both your identity and our practice. If you have not yet provided us with the required identification documents to assist us in verifying your identity with YML Group, please anticipate a subsequent email as a friendly reminder.

How can YML help?

Talk to our YML Chartered Accountants Team today to see how YML Group can assist you with your identification process. For more information, view our website and contact us on (02) 8383 4400 or by using our Contact Us page on our website.