Like other taxpayer entities, a complying SMSF is entitled to deduct from its assessable income any losses or outgoings that are:
• incurred in gaining or producing assessable income
• necessarily incurred in carrying on a business for the purpose of gaining or producing such income.
Expenses that a complying SMSF can deduct include:
• the supervisory levy
• insurance premiums for death and disability policies – these are deductible provided the policies have the necessary connection to a liability of the fund to provide death or permanent incapacity benefits (not other types of disability benefits)
• accounting and auditor fees (this includes Redwood Advisory’s administration fee)
• interest – a complying SMSF is generally prohibited from borrowing money or maintaining an existing borrowing of money, but interest incurred in gaining or producing assessable income would be deductible.
• Losses and outgoings relating to exempt current pension income are generally not deductible because they are incurred in earning exempt income.
• Insurance premiums – up to 30 June 2011 insurance premiums paid for a policy insuring against any form of permanent disability are fully deductible.