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Ruling
Subject: tax return fees
Question
Is the superfund entitled to a deduction for the professional fees incurred for the preparation of their financial statement and tax return?
Answer
Yes.
This ruling applies for the following period
Year ended 30 June 2011
The scheme commenced on
1 July 2010
Relevant facts
The trustee who is also a member of the Superannuation Fund prepares the financial statement and income tax return for the fund.
The trustee bills the fund for their professional services.
The trustee is an accountant and registered tax agent.
The superfund pays the trustee the commercial rate for these professional services.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1.
Reasons for decision
Section 8-1 of the Income Tax Assessment Act 1997 (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.
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. Accountancy fees incurred by a superannuation fund are generally deductible.
Section 25-5 of the ITAA 1997 allows a deduction for expenditure incurred in managing tax affairs. Therefore fees paid by the superannuation fund in relation to preparing the income tax return for the fund is an allowable deduction.
A superfund is a separate entity from its members and is taxable in its own right. Therefore it is necessary to determine who incurred the various expenses in order to determine if a deduction is allowed for the superfund.
In this case, as the superfund is paying the trustee in an arms length arrangement, the associated expenses incurred by the superfund for the preparation of their financial statement and income tax return are an allowable deduction.
Please note, where an expense relates to both assessable and exempt income, the deduction is apportioned accordingly.