Private ruling: Supervisory levy
Published: October 2012
Ruling period: Year ended 30 June 2012 | Year ended 30 June 2013
Date scheme commenced: 1 July 2011

Ruling: Q1: Is the superfund entitled to a deduction for the supervisory levy incurred? | A1: Yes.


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 25-5.

Reasons for decision: Detailed Reasoning - Detailed reasoning: Section 25-5 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for expenditure incurred in managing your tax affairs. The superannuation supervisory levy payable under the Superannuation Supervisory Levy Act 1991 on lodgement of the Australian Prudential Regulation Authority annual return is deductible under section 25-5 of the ITAA 1997 as it relates to the management and administration of a superannuation fund's tax affairs. Section 25-5 of the ITAA 1997 does not require the deduction to be apportioned. Tax related expenses deductible under section 25-5 are not regarded as apportionable deductions. Taxation Ruling TR 93/17 discusses the tax deductions available to superannuation funds. The tax deductibility of expenditure incurred by a superfund is usually determined under section 8-1 of the ITAA 1997. Under section 8-1, the expenditure is deductible only to the extent to which it is incurred in producing assessable income and is not capital, private or domestic in nature. The expenses listed in paragraph 4 of TR 93/17, such as accountancy fees need to be apportioned if they are incurred partly in producing assessable income and partly in producing exempt income. TR 93/17 does not include tax related expenses allowable under section 25-5 of the ITAA 1997 as those that require apportionment. The Commissioner accepts that certain specific deductions can be claimed in full, whether they provide exempt or assessable income, for example, tax related expenses such as the supervisory levy and death and disability premiums. This is confirmed in the Australian Taxation Office's publication Self-managed super funds and tax exemptions on pension assets ( please refer to the information provided under the heading How are expenses treated when an SMSF has ECPI?). Therefore the supervisory fees paid by the superannuation fund are deductible in full. This is so even if all the income for the superfund is exempt income. Please note, the late lodgement amount for the supervisory levy is specifically denied under section 26-90 of the ITAA 1997.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet. | Relevant facts: The Superannuation Fund is in full (100%) pension mode. | All income is exempt current pension income. | The superfund has paid the supervisory levy.