Howdy all, Some time ago, a member wrote about recovering the cost of establishing his/her SMSF through some kind of refund? My searches with the ATO/ASIC etc. haven't turned up any topics along these lines. Even dug into the SIS Act without finding any answers. Does anyone here have any details on how it can be done? Are there any criteria involved?
You can get your SMSF to refund the establishment costs back to you if you have paid it out before the SMSF was set up. You simply draw from the SMSF for the amount and it sits on your SMSF Balance Sheet as "Formation Costs".
Hi RCS If you are referring to the fund deducting the costs involved in establishing itself from its earnings to reduce its first tax bill, sorry this can't be done. The costs are regarded as capital expenditure (this is clear from ATO ruling IT 2672). If you are referring to a refund to the member who paid the costs involved in establishing the fund, yes the fund can refund this to the member. However this needs to be the intention at the time of the expenditure, otherwise it could amount to a loan of the money by the member to the SMSF which would not be allowed [see ATO ruling SMSSR 2009/2 and s67(1) of the SIS Act].
