FocusOn - GST and Superannuation Funds

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Superannuation funds are generally prohibited from carrying on a business in the usual sense. However, for GST purposes, a superannuation fund is taken to be carrying on an enterprise. A Self Managed Superannuation Fund (SMSF) can therefore be registered for GST.

GST is payable to the ATO by a SMSF only if the fund is registered, or required to be registered for GST. Input tax credits can only be claimed if the fund is registered and has a tax invoice for the expenditure.

Does your fund need to register for GST?

You must register for GST if your GST turnover is $75,000 or more. In general this applies to funds that own commercial property.

An entities' GST turnover is the greater of its current and projected GST turnovers.

Current GST turnover is the value of all supplies made or likely to be made in the current month plus the previous 11 months, and projected GST turnover is the value of all supplies made or likely to be made in the current month plus the next 11 months.

Income not included in GST Turnover

Most SMSFs do not have to register for GST because SMSFs mainly make input taxed sales, and these do not count towards your GST turnover.

The following transactions are not included in GST turnover and no GST is payable by the fund to the ATO in respect of money received from them:

	Employer contributions
	Member account administration fees
	Dividend income
	Residential property rent
	Distributions of income and capital from trusts
	Member contributions
	Member life insurance premiums
	Interest income
	Proceeds from the sale of residential property
	Proceeds from the sale of shares/debentures

Income included in GST Turnover

However, the following income is included in a SMSF's GST turnover:

	Commercial property rent
	Proceeds from the sale of commercial property (Note: Special rules apply to premises constructed prior to 1 July 2000)
	Salary continuance premiums

If a SMSF receives income of $75,000 or more from one or more of the above activities it will be required to register for GST and remit 1/11th of the income to the ATO as GST. 

Voluntary Registration

A fund may chose to voluntarily register for GST. In deciding whether to register you should consider any increase in time or costs for record keeping and reporting.

Expense items

If a fund is registered for GST its expenses will fall into three categories:

Input taxed

These are expenses where GST has been included in the price charged to the fund. No input tax credit can be claimed from the following transactions, as the transaction relates to an activity that is not for a creditable purpose:

	Fees for general legal advice
	Fees paid for the preparation of income tax returns
	Repairs to and maintenance of residential property Audit fees
	Residential property insurance
	Goods purchased for fund administration purposes
	Estate agent's residential property management fees
	Fees for preparation of BAS

Reduced input tax credit

These are expenses where GST has been included in the price, and are entitled to a reduced input tax credit (75% of the 1/11th price paid).

	Fees paid to an external administrator
	Investment management fees and charges
	Actuarial fees
	Fees paid to an accountant for fund administraton (other than for preparation of tax return & BAS)

Fully deductible

These are expenses that have had GST included and the fund can claim the full input tax credit of 1/11th of the price.

	Estate agent's commercial property management fee
	Salary continuance insurance premium where the cost is passed on to the member
	Repairs to and maintenance of commercial property
	Expenses directly related to the sale of commercial property
	Purchase of commercial property (Note: Special rules apply to premises built before 1 July 2000)
	Commercial property insurance

Published : July 2012