Are SMSF Setup Costs Deductible by the ATO?
- georgia3841
- May 19
- 2 min read
Updated: Aug 19
Setting up a Self-Managed Super Fund (SMSF) is a major step for many Australians, offering more control over retirement savings. But it also comes with a mix of setup and ongoing costs.
A common question we get is whether those initial setup costs can be claimed as tax deductions. Understanding what the ATO allows and what it can't, will help you avoid confusion, stay compliant and better plan your budget.
1. What SMSF Setup Costs Are Deductible?
Not all SMSF setup costs are deductible. Here's how it breaks down:
Non-Deductible Costs are considered capital expenses and typically include:
Trust deed establishment
Legal fees for setting up the fund
Initial financial advice
These can’t be claimed on your tax return but may be added to your fund’s cost base for future capital gains tax purposes.
Deductible Costs are costs you may be able to claim once your fund is running. These costs typically include:
Accounting and audit fees
Bank charges
Investment management costs
These are ongoing costs and are generally deductible, annually.
2. Why the ATO Doesn’t Allow Setup Cost Deductions
The ATO sees SMSF setup costs as part of establishing a long-term financial structure, not maintaining it. Because these are capital in nature, they’re treated differently from operational costs.
This is why you can’t claim them as immediate tax deductions, even though they’re necessary to start the fund.
3. Best Practices for Managing SMSF Setup Costs
While setup costs aren’t tax-deductible, here’s how you can manage them wisely:
Plan ahead and know all setup costs upfront. Consider working with a financial advisor who specialises in SMSFs to avoid surprises.
Keep records and document all setup-related expenses. They might not be deductible now, but could be useful for future tax considerations.
Separate your costs and clearly distinguish between capital (setup) and operating (deductible) expenses for cleaner reporting and smoother audits.
4. Do’s and Don’ts
Do
Get professional advice to maximise legal tax claims
Keep track of both deductible and non-deductible expenses
Don’t
Assume every SMSF-related cost is deductible
Forget to store your invoices and receipts even for non-deductible items
Thinking of setting up an SMSF or unsure what costs you can claim?
Book your FREE 15-minute discovery call with our team at RISE Accountants. We’ll help you get started with confidence and stay compliant from Day One.