Income tax deduction
Australian Prudential Regulation Authority (APRA)-regulated super funds incur various expenses that may be tax-deductible. Expenses may be deductible under the general deduction provision, or there may be a specific provision of the income tax laws that makes an expense deductible.
This information covers general guidance on deductions, with examples of common expenses and how to apportion them. We include links to relevant legal provisions and advice.
For relevant laws, see:
- Income Tax Assessment Act 1997
- Income Tax Assessment Act 1936
- Superannuation Industry (Supervision) Act 1993
Tax deductible expenses
The following expenses are generally deductible to a super fund, except where they're capital expenses:
- accounting and audit fees, and actuarial costs incurred in complying with super laws
- legal expenses not capital in nature
- ongoing management fees or retainers incurred in ‘servicing’ an investment portfolio
- operating expenses
- trust deed amendments not capital in nature
- fees for trustee services not capital in nature.
Expenses aren't deductible where they're incurred in gaining non-assessable income. If incurred partly in gaining assessable income and partly in gaining non-assessable income, these expenses must be apportioned.
Specific deductions
A deduction is available to a complying super fund that pays:
- tax-related expenses such as accounting, audit fees and actuarial costs relating to tax matters, except when they're capital expenses
- super supervisory levy as a tax-related expense
- death, total and permanent disability, terminal illness and income protection insurance premiums. The deduction is determined according to proportions specified under super law
- an anti-detriment payment where the dependants will receive some benefit. This deduction will no longer be available for lump sum death benefits where the member died on or after 1 July 2017
- financial assistance levy that is payable by APRA-regulated super funds and is fully deductible to a complying or non-complying super fund.
A deduction may be available for:
- certain business-related capital expenditure (or blackhole expenditure) over a period of 5 years
- the cost of depreciating capital assets held by the trustee of a super fund and used in gaining or producing the fund's assessable income.
For more information, see:
- Capital allowances
- Expenses you can claim
- Taxation Ruling TR 93/17 Income tax: income tax deductions available to superannuation funds.
When the trustee can claim
Generally, the trustee can claim the super fund’s expenses in the year the trustee incurs them. However, the costs of capital items (such as plant and equipment) and business-related capital expenditure may be claimed over a number of years.
For more information, see Taxation Ruling TR 97/7 Income tax: section 8–1 – meaning of 'incurred' – timing of deductions.
Keeping records
Funds must keep records, in English, in writing or electronically. The records must be in a form we can access and understand. Generally, funds must keep all relevant records for at least 5 years. This period may be longer in certain circumstances.
For more information, see:
- Record keeping requirements
- Taxation Ruling TR 96/7 Income tax: record keeping – section 262A – general principles,
- Taxation Ruling TR 2005/9 Income tax: record keeping – electronic records.