Issue

Why is the supervisory levy showing as a deductible expense when the fund is in deemed segregated phase?

Resolution

As per  the ATO - If the fund is 100% in retirement phase, generally expenses shouldn't be deducted as they will be incurred in gaining ECPI.
Certain deductions can be claimed in full, whether they provide exempt or assessable income – eg, tax-related expenses such as the supervisory levy and death and disability premiums.

Please refer to the ATO link - How expenses are treated when an SMSF has ECPI.