Establishment expenses incurred (including costs to establish a corporate trustee, if there is one) for setting up a self-managed superannuation fund does not qualify as a deduction under ITAA 97 s40-880 as the super fund has not necessarily incurred the expenses in carrying on a business for the purpose of gaining or producing assessable income. Rather, they are outgoings of capital or of a capital nature.

This issue is specifically covered in Taxation Ruling IT 2672 which states, costs incurred by a trustee of a superannuation fund in amending the fund’s trust deed are not deductible under subsection 51(1) of ITAA 1936.

Specific examples that the ATO give of amendment costs which are not deductible are costs incurred in:

  • establishing a trust; and
  • executing a new deed for an existing fund; and
  • amending a deed to enlarge or significantly alter the scope of the trust’s activities.

But there is one exception!

Any costs incurred by a SMSF trustee in amending a trust deed are deductible if the amendments are needed due to changes in Government regulations, and are made to ensure that the fund’s day to day operations continue to satisfy its compliance obligations.