How are expenses treated when an SMSF has ECPI?
Generally, expenses which the SMSF incurred in deriving ECPI cannot be claimed anywhere on the SMSF annual return. This means that these expenses must not be included as part of the deductions claimed in the SMSF annual return. Expenses incurred in gaining or producing exempt or non assessable non-exempt income, or expenses of a capital or private or domestic nature are not an allowable deduction. Generally, where an expense is incurred which relates to both accumulation and super income stream based income, the expense must be apportioned so that only the proportion of the expense relating to the production of assessable income is claimed. Taxation Ruling TR93/17 provides further advice regarding the method for apportioning the expense. 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.
