SMSF trustees cannot claim travel expenses relating to residential investment property. This restriction has been in place since 1 July 2018 but is still not widely known. Removing this deduction reduces the potential of it being used as an early release mechanism whereby the SMSF is used to fund an annual trustee holiday to some exotic location in Australia or beyond. To be clear, the fund may pay reasonable travel expenses, they are merely not deductible, neither can they be adjusted against the capital base of the asset.

Any trustee who is considering such an investment in the expectation that such travel is acceptable should think again. If the decision to purchase the property is favourably influenced by the prospect of private travel, this is a breach of the sole purpose test, the most fundamental and important of all tests.