Navigating SMSF Expenses: What Your Fund Can and Cannot Pay For

Self-managed superannuation funds (SMSFs) offer a degree of control and flexibility over your retirement savings. However, with this control comes the responsibility of ensuring you adhere to strict guidelines regarding SMSF expenses.

Exclusive Use Principle

The fundamental rule governing SMSF expenses is the exclusive use principle. This means that an expense must be solely for the purpose of running and managing the SMSF, and it cannot be used for any personal or non-SMSF purposes.

Common Allowable Expenses

Several expenses are typically considered allowable for an SMSF, including:

  • Accounting fees: Accountants play a crucial role in maintaining SMSF compliance and ensuring proper financial management. Fees associated with these services are generally deductible.

  • Advice fees: Seeking professional financial advice can be beneficial for SMSF trustees. Fees incurred for SMSF-related advice can be claimed as expenses.

  • Supervisory levy: The SMSF supervisory levy, imposed by the Australian Securities and Investments Commission (ASIC), is a mandatory annual fee that SMSFs must pay.

  • Subscriptions and newsletters: Subscriptions to publications and newsletters that provide SMSF-specific information and guidance are often deductible.

  • Software: Expenses related to software used solely for SMSF management, such as trading platforms or portfolio tracking tools, can be claimed.

  • Property expenses: If the SMSF holds investment properties, expenses such as rates, maintenance, and property insurance are generally deductible.

Life Insurance Considerations

SMSFs can pay for life insurance premiums for their members, but certain restrictions apply. Only death cover, total and permanent disablement (TPD) insurance, and income protection insurance are permitted. Trauma cover is not allowed.

Naming Conventions

It's crucial to ensure that all expenses paid by the SMSF are billed in the SMSF's name. This includes life insurance premiums. While reimbursements may be allowed in certain situations, the original invoice should be addressed to the SMSF.

Maintaining Compliance

Proper documentation and recordkeeping are essential for demonstrating compliance with SMSF expense regulations. Retain all receipts, invoices, and other relevant documentation to support your claims.

Seeking Professional Guidance

Given the complexities of SMSF expenses, it's advisable to seek professional guidance from a qualified financial advisor or SMSF specialist to ensure you are adhering to all relevant regulations and maximizing your tax deductions.

Why not take the next step and talk to a qualified financial planner? 

LifeTime Financial Group are specialist (holding appropriate accreditations) advisors who are ideally positioned to assist you with your Self Managed Super arrangements. 

If you would like to discuss your financial planning needs, why not call us today on 03 9596-7733? There is no cost or obligation for our initial conversation/meeting.

Alternatively, please make an appointment using our online Book an appointment (Blue button above)

LifeTime Financial Group. A leading privately-owned Melbourne-based Financial Planning practice with no ties to any financial institution.

Back to all News