Investments in SMSF Collectables and Personal Use Assets

On the 19th May 2011, draft rules for SMSF Investments in collectables and personal use assets was issued, which received royal assent on 27th June 2011 and are now law.

The rules outlined below will apply for all new investments in collectables and personal use assets from 1 July 2011, with all existing holdings required to comply with the regulations or be disposed of by 1 July 2016.

The Rulings are designed to ensure that SMSF trustees do not receive a current day benefit from investments in collectables or personal use assets and that all investments made are for the benefit of the members retirement.


The New Rules on SMSF Collectables and Personal Use Assets...

Investments involving artwork; jewellery; antiques; artefacts; coins or medallions; postage stamps or first day covers; rare folios, manuscripts or books; memorabilia; wine; cars; recreational boats and memberships of sporting or social clubs, are defined in the newly inserted section 62A of Superannuation Industry (Supervision) Act 1993 (SISA) to allow regulations in section 13.18AA of Superannuation Industry (Supervision) Regulations 1994 (SISR) to prescribe the following rules in relation to trustees of regulated Self Managed Super Funds that are making, holding and realising investments involving items as described above in red and in section 62A of SISA.

  • If one of the above assets are leased to a related party, each trustee of the SMSF commits an offence.
  • If one of the above assets are stored in or at a private residence of a related party, each trustee of the SMSF commits an offence.
  • The above asset(s) must be stored at a non related parties premises. If the decision on the storage of the asset is not documented and kept for at least 10 years after the decision or a decision is never made, then each trustee of the SMSF commits an offence.
  • Each asset above held by the SMSF for more than 7 days must be insured in the SMSF's name (other than a membership of a social or sporting club), otherwise each trustee of the SMSF commit an offence.
  • If the SMSF holds an item of jewellery; a car; a recreational boat; a membership of a sporting or social club and a related party uses them, the trustees of the SMSF commit and offence.
  • If one of the above assets are transferred to a related party and not at a market price determined by a qualified independent valuer, the trustees of the SMSF commit an offence.

The rules are quite straight forward and don't allow a SMSF to bend the rules on collectables. No longer can a SMSF hold a painting and display it at home or in the office of a member. Nor can a collectable car be kept at home or driven for that matter. The rules are clear.

Trustees must not use SMSF assets for personal enjoyment or use. A SMSF and the investment decisions made must be for the benefit of the members in retirement or to support a tax dependant in the case of death.

For a Question and Answer fact sheet on this topic from the ATO please visit this link here.

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