Over my 18 years of experience within the industry, I have seen Trustees incorrectly accounting for the Goods and Services Tax (GST) within their self-managed superannuation fund (SMSF).
I don’t believe this is complacency just that for some it is not common knowledge that GST, on transactions, within an SMSF may be treated differently than the GST, on transactions, entered into by non-SMSF entities. I have regularly seen this through conducting audits and discussions with Trustees through my years in the industry.
Some individuals have been using the same methods that they do for their business for their SMSF; as a result, GST is being recorded incorrectly within the Fund, and to the ATO.
The first step in considering your liability to GST is to determine whether the SMSF is required, or voluntarily wants to, register for GST. Funds are only required to register for GST once the Fund’s turnover is greater than $75,000 per year; SMSFs may register if their turnover is less than $75,000, however, they are under no obligation to.
The reason that most Funds do not meet the registration threshold is that their “turnover” is generally limited to rent from commercial property. If the SMSF does not reach the registration threshold there should be a comparison made to any benefit of registration versus the increased accounting costs in preparing monthly, quarterly or annual Business Activity Statements (BAS).
The claiming of GST (input tax credits) falls into 3 groups:
- Fully claimable – You can claim 100% of the GST;
- Reduced Input Tax Credits (RITC) – You can claim 75% of the GST
- Not claimable – No GST can be claimed.
The table below lists a variety of examples of the GST treatment of various expenses (and is not detailed):
|Full – 100% Claimable||RITC – 75% Claimable||NO CLAIM – 0% Claimable|
|Commercial property purchase, including legal fees||Administration fees (except audit and tax return fees)||Audit Fees|
|Commercial property expenses
(exc. Government charges such as rates)
|Investment management fees||Fees to prepare tax returns|
|Actuarial Fees||Fees to prepare activity statements|
|Residential property purchase and expenses|
Stellar Super Pty Ltd