SMSF PROPERTY DEDUCTIONS
One of the great benefits of property in an SMSF is the raft of available deductions. Expenses that are likely to be deductible include bank charges, brokerage, filing fees, fines, interest paid insurance premiums, valuation and storage costs, property expenses, relevant training courses, subscriptions, administration software fees.
Some of the common property related deductions are the following
- Interest costs
- Depreciation ( need a quantity surveyor’s report)
- Property maintenance costs (rates, service fees, postage)
- Property management costs
- Property ongoing advisory costs
- Legal costs
- Loan establishment costs
- Bare Trust establishment costs
- Land tax
- Landlord insurance
- Members expense reimbursements for travel to inspect property, collect rent or manage property
- Lender Mortgage Insurance Fees
- Stamp Duty Fees
- Title Search fees
Shares, ETF’s and Managed Funds
- Brokerage costs
- Ongoing advisory fees
- Broker reporting service costs
- Research subscriptions, memberships
- Insurance premium costs for Life & TPD cover only
ASIC Fees and ATO fees are deductible as our audit and accounting fees
SMSF Fund Compliance Fees
- actuarial costs;
- accountancy fees;
- audit fees;
- updating your trust deed to comply with the SIS Act;
- other administrative costs incurred in managing the fund.
Refer to the ATO tax ruling (TR 93/17) for more details
Travel costs: BUDGET 2017 UPDATE
Typically travel costs, accommodation and meal costs, which are incurred to visit an investment property, to facilitate the maintenance and inspection of the property are allowed. It is important to point out that travel costs cannot be claimed where a holiday is combined with a property inspection.
Example: If an SMSF members take a 7 day trip to the Gold coast with the family and visit the property on one day, you would be allowed to claim the expenses for the day spent inspecting the property. So one day’s accommodation, travel, and food.
Effective from 1 July 2017:
Deductions for travel expenses related to inspecting, maintaining or collecting rent for a residential rental property, inclusive of SMSF’s, Trusts and individuals has been abolished. The government is concerned that many taxpayers have been claiming travel deductions without correctly apportioning costs, or have claimed travel costs that were for private travel purposes.
SMSF Setup Costs
When setting up an SMSF, if the setup fee is paid from the SMSF, it will be a capital cost deduction. It will not be if funded personally. Bare trust setup fees are tax deductible and are deducted when the property is settled and this cost can be depreciated if needed.
Can a member of an SMSF be paid for services?
You cannot be paid for performing duties as a trustee of an SMSF, but you may be able to be paid for professional services, which are provided to your SMSF provided that
- You are licensed and qualified to perform the service
- You provide similar services to the public as part of a business you operate
- The payments are on commercial terms at arm’s length
Example: John Stevens is Plummer by profession. He owns a property in his SMSF. His tenant needs a tap fixed in the property he owns. John is able to provide this service as he is licensed and qualified and he runs a plumbing business. John charges his SMSF what he would normally charge his direct customers. His fee is neither above the market rate or below. John will therefore not fall foul of the super arm’s length laws under section ( SISA 109)
Crypto Currency Setup Fees and Costs:
- Generally for investors costs are capital costs, which are offset when an asset is sold
- For Traders and miners, costs are deductible each year
Warning: This is general information only. Speak to your tax agent to discuss allowed SMSF deductions.