SMSF Trustees who hold investments in collectables and personal use assets should be aware of the 30 June 2016 deadline to satisfy the requirements under super legislation.

Any collectable and personal use assets acquired from 1 July 2011 must satisfy certain rules (outlined below). For collectables and personal use assets that were held by the fund before 1 July 2011, the SMSF Trustee has until 30 June 2016 to comply with these rules.

SMSFs can invest in collectables and personal use assets provided the following rules are satisfied:

  • The asset cannot be leased to a related party
  • The asset cannot be used by a related party
  • The asset cannot be stored in the private residence of a related party
  • If there is any decision relating to the storage of the asset, a written record of the decision must be kept for 10 years.
  • The asset must be insured in the super fund’s name (within 7 days of acquiring the asset)
  • If the asset is transferred to a related party (eg. as part of a lump sum benefit payment) the market price must be determined by a qualified independent valuer.

Collectables and personal use assets include:

  • Artwork, jewellery, antiques, artifacts, coins, medallions, postage stamps, rare folios, manuscripts or books, memorabilia, wine, spirits, motor vehicles, motor cycles, recreational boats and membership of clubs.

A related party generally includes members of the fund, their relatives and connected entities.

Implications for clients

  1. SMSFs can still continue to invest in collectable and personal use assets provided the above rules are satisfied.
  2. You may wish to contact Trustees to ensure they are aware of the 30 June 2016 deadline to rectify any non-compliance.
  3. Trustees should consider the appropriateness of these assets and investment strategy of the fund.

 

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David Watkins, has been providing advice to clients since 1987. He is a Certified Financial Planner, a member of the Financial Planning Association (FPA), and Superannuation Professionals Association of Australia (SPAA).Google Plus

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