16 June 2011
Why stop at art? What about collectors items - some fine wine perhaps? Or, a few antiques?
The answer is yes you can include these types of collectors items in your SMSF - as long as the asset is genuinely for retirement income purposes, not for your personal use now, and not acquired from a related party.
However, the Government is looking closely at what SMSFs acquire and how those assets are managed.
Last month, the Government released draft regulations that will guide what and how SMSFs buy, sell, and manage collectibles. The regulations seek to ensure that trustees do not gain a benefit from those assets now.
For example, you cannot hang artwork purchased by your SMSF on your wall at home or wear jewellery acquired by the fund. This is because the Superannuation Industry Supervision Act (SIS) requires that all assets acquired by a SMSF are used for retirement purposes only.
If you are using the assets now, you breach SIS as the asset is not exclusively for retirement purposes.
Storage of collectibles owned by your SMSF will be a major issue as it will be important to show that you are not benefiting from the asset now ñ so no storing the asset at home or in the home of a related party. Nor can you arrange to lend the asset to a related party, even if the asset is being rented.
The regulations cover collectable and personal use assets include 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.
These amendments are proposed to commence on 1 July 2011 and will be applicable to investments made before, on or after 1 July 2011. There will be a 5 year transitional period to allow any existing SMSF holdings of collectables and personal use assets to be disposed of if they do not comply with the legislative standards.
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This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.