Private ruling: Transfer balance cap
Date of advice: 17 May 2018
Published: July 2018
Ruling period: Year ending 30 June 201X
Date scheme commenced: 1 July 201X

Ruling: Q1: Are you entitled to a deduction for an amount paid for your self-managed superannuation funds (SMSF) affairs? | A1: No.

Relevant facts and circumstances: You and your child are trustees of a complying SMSF. You paid accounting fees to sort out the affairs of the SMSF, such as obtaining an actuary and preparing the end of year financial statements.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 8-1 | Income Tax Assessment Act 1997 section 25-5

Reasons for decision: Summary: Section 25-5 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for certain tax related expenses. Paragraph 25-5 (1)(a) of the ITAA 1997 provides a deduction for expenditure you incur for managing your tax affairs. Section 995-1 of the ITAA 1997 defines tax affairs as affairs relating to tax. Tax is defined in section 995-1 to mean: (a) income tax imposed by the Income Tax Act 1986 , as assessed under this Act; or (b) income tax imposed as such by any other Act, as assessed under this Act. Income tax as defined in section 995-1 of the ITAA 1997 means income tax imposed by any of these: (a) the Income Tax Act 1986 ; (b) the Income Tax (Diverted Income) Act 1981 ; (c) the Income Tax (Former Complying Superannuation) Funds) Act 1994 ; (d) the Income Tax (Former Non-resident Superannuation Funds) Act 1994 ; (e) the Income Tax (Fund Contributions) Act 1989 . The excess transfer balance tax is imposed by the Superannuation (Excess Transfer Balance Tax) Imposition Act 2016. As the transfer balance tax is not imposed by any of the Acts listed in the definition of income tax in section 995-1 of the ITAA 1997, it is not considered to be an income tax for the purposes of paragraph 25-5(1)(a) of the ITAA 1997. Therefore as the requirements of paragraph 25-5(1)(a) of the ITAA 1997 are not satisfied, a deduction is not allowable for expenses incurred in relation to transfer balance tax. In your case you paid fees in relation to your SMSF affairs. The SMSF is regarded as a separate entity for tax purposes. Therefore, any expenses paid for SMSF matters do not relate directly to your affairs, they relate to the SMSF. Section 8-1 of the ITAA 1997 allows a deduction for all losses and outgoings to the extent to which they are incurred in gaining or producing assessable income except where the outgoings are of a capital, private or domestic nature, or relate to the earning of exempt income, or a provision of the ITAA 1997 prevents it. The expenses you paid relate to the affairs of the SMSF and not to your individual affairs, therefore no deduction is allowable to you under section 8-1 of the ITAA 1997.