Masterclass – SMSF – Collectables and Other Assets – Keep it Legal

Collectables and Other Assets - Keep It Legal

Collectables and Other Assets – Keep It Legal

Collectables and other assets aren’t a large proportion of the assets that SMSF’s invest in, actually less than 3% of total SMSF assets, as the ATO reports see here. If considering collectables, you must keep it legal and be aware that new rules apply from 1 July 2011. Collectables, other and personal use assets acquired before 1 July 2011, have a transition period until 1 July 2016 to comply with the new rules.

Section 62A of the Superannuation Industry (Supervision) Act 1993 (SIS Act) provides that the regulations may make rules in relation to trustees of self-managed superannuation funds (SMSF) making, holding and realising investments involving collectables and personal use assets.

Assets that are taken to be collectables and personal use assets are defined in Regulation 13.18AA (1) and include:

  • Artwork (within the meaning of the Income Tax Assessment Act 1997 (ITAA97));
  • Jewellery & antiques;
  • Artefacts & coins, medallions or bank notes;
  • Postage stamps or first day covers;
  • Rare folios, manuscripts, books wine or spirits;
  • Memorabilia;
  • Motor vehicles & recreational boats;
  • Memberships of sporting or social clubs.

What the regulations require:

  • Keeping arm’s length – separate from personal and business assets;
  • Acquisition by a related party to be at market value determined by a qualified independent valuer;
  • No enjoyment/use now, or benefit to trustees or their related parties, eg no display of artwork in house or business, no driving antique cars even to a service (an unrelated party must do it);
  • Leasing to galleries is permitted if no related parties are involved;
  • Insure items within 7 days of acquisition and in the name of the SMSF, so gallery insurance will not suffice and be aware that insurance companies will have a say in how the item is stored
  • Written record of reasons for decisions on storage and keep records for 10 years.

So when considering assets other than the traditional shares, cash, term deposits and managed funds, always know the rules, keep it legal and seek advice about collectables, other assets and personal assets. As always, include then in your investment strategy, and have all trustees sign it.

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About SuperBenefitnews

Self-Managed Superannuation Service Providers in Australia. SuperBenefit provides a wholistic SMSF assistance, education and administration service continuum - 1. “assistance” is help of whatsoever nature where our overall SMSF experience and knowledge enables us to provide assistance/help without any legal (or “license”) limitations. 2. “education” involves providing knowledge through teaching, coaching and mentoring about all matters SMSF, including (but not limited to) investment issues such as equities and property, 3. “administration” encompasses all admin aspects of legally required SMSF trustee and member record keeping including (but not limited to) audit and ATO matters. In keeping with our key point that SuperBenefit does not provide Financial Advice, where issues arise from 1, 2, and/or 3 above Indicate a need for a legally authorized provider (such as a Financial Adviser) and the client does not have their own service provider, the client can utilize SuperBenefit’s ‘Connect Assist’ … SuperBenefit, in itself, does not provide Financial Advice, but it does provide the wherewithal for great SMSF service. WE do not provide Financial Advice or any other service that requires a legally authorized provider. However, where such advice or service is required we have our ‘Connect Assist’, a SuperBenefit resource we use to connect clients to a Licensed Advisor or other legally authorised service provider. Call us 0407 361 596, no obligation FREE Connection call to see how we can help you!
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