Collectable Assets Within SMSF's
by Ian Morella, Director of Accounting
Defining what is and isn’t a “collectable” or “personal use” asset within your Self Managed Superannuation Fund (SMSF) is somewhat complicated, and it’s important you are fully aware of the regulations involved when listing these types of assets within your SMSF.
Draft regulations have recently been released by the Assistant Treasurer and Minister for Financial Services. The new regulations still allow SMSF Trustees to continue to invest in collectables and personal use assets (defined as a S.62A item – “asset”), however under the new legislation they would be subject to tighter rules, which include how these assets are stored and valued. This is to ensure these types of investments are made for genuine retirement income purposes, and not for Trustees’ personal enjoyment.
What is a “Collectable”?
The new regulation specifies the rules that apply to SMSF investment in collectables and personal use assets.
The assets that can be defined as collectables or personal use items are:
- Artwork
- Jewellery
- Antiques
- Artefacts
- Coins or medallions
- Postage stamps or first day covers
- Rare folios, manuscripts or books;
- Memorabilia
- Wine
- Cars
- Recreational boats
- Memberships of sporting or social clubs
New Regulations
If you intend on listing any of the above assets in your SMSF for investment purposes, it’s important you are not in breach of the ATO’s rules regarding where you keep these assets or how you use them.
The new regulation specifies that Trustee’s of a SMSF will have committed an offence if:
- The asset is stored in the Trustee’s private residence or a related property
- A related party uses an asset (such as jewellery, car, recreational, boat or membership of a sporting or social club)
- The Trustee disposes of an asset to a related party, at a price other than a market price determined by a qualified independent Valuer
- The Trustee enters into a lease or lease arrangement (being an informal arrangement under which a person uses or controls the use of SMSF property, including where no rent is payable) with a related party in relation to an investment involving an asset
- The Trustee doesn’t keep a record of the reasons why they stored the asset where they did
- The Trustee doesn’t insure the asset in the name of the SMSF within 7 days of acquisition of the asset (apart from memberships of a sporting or social club)
Transitional period
For S.62A assets that are held by a SMSF before 30th June 2011, the old regulations apply until 1st July 2016, whereby the Trustees for the SMSF would have to start complying with the new regulations.
If you currently hold “collectable” or “personal use” assets within your SMSF, or would like advice on your SMSF obligations, please contact our Client Liaison Officer on 1300 726 082 who can arrange an appointment with a John Hopkins Taxation Accountant.
For more information, or to arrange an appointment with a John Hopkins Taxation Accountant, please contact our Client Liaison Officer on 1300 726 082 or click here.