James Cockington, at The Sydney Morning Herald reports that the investment in alternative asset classes such as collectables and art for Self-manages super funds (SMSF) is not as popular –
“If the taxman introduced a bewildering maze of regulations to prevent people from splurging their precious self-managed super funds on art works and antiques, then it appears the plan has worked. According to John Albrecht, managing director of the Leonard Joel auction house, ”buying through super funds is on the decline”. He says it’s hard to gauge exactly how much, or how little, is being transacted through self-managed super funds (SMSFs) in these days of electronic funds transfers, but the lack of interest is obvious. ”[Investing through super] was fairly pronounced a few years ago, but the advice that people are now getting from their accountants is that it’s not worth the trouble,” he says. Even his own accountant has delivered this message. Paul Sumner of Mossgreen Auctions agrees. ”There’s a huge amount of indecision at the moment,” he says. He’s heard on the grapevine that the Abbott government may be looking at repealing the regulations. This fits in with its mantra for cutting red tape although nobody is sure when, and if, this will happen.
The current ATO regulations do not apply to SMSF collections established before June 30, 2011 until June 30, 2016. Many of those stuck in this limbo period are expected to sell their art works before that deadline arrives. In brief, the ATO’s current policy is that art works – which includes ”exotics” such as jewellery, antiques, rare coins, stamps and manuscripts – can only be bought through super funds if the investor has storage solutions in place before they buy. The asset has to be insured within seven days of purchase. They’ll need to keep written records of this documentation for the next 10 years. What this means is that the painting, sculpture, coin or stamp cannot be displayed – and therefore ”enjoyed” – on the owner’s property, nor kept in the owner’s office or on private premises, including garages and sheds on their property. The homes of family members are also excluded.
Draconian as they may appear, these regulations are a compromise from the Gillard government’s plans to prohibit all art acquisitions from being claimed as SMSF investments. A number of auction houses and art galleries launched a successful protest against this proposal. Albrecht understands why the regulations were introduced and in some ways is a supporter: ”People say to me, why shouldn’t you be allowed to enjoy your investment? … on the other hand the ATO is saying that you shouldn’t be investing your super on aesthetic grounds.” Read more
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