When it comes to assets like artwork and wine—to name a few—you need to make sure your fund complies with new rules.
Online source: Produced by AMP Life Limited and published on 10 September 2015.
On 1 July 2011, new regulations stipulating the way trustees of a self-managed superannuation fund (SMSF) hold and use collectibles and personal-use assets took effect. A five-year period of transition, giving trustees time to ensure existing assets are compliant, will expire on 30 June 2016.
That means all collectables and personal-use assets held by an SMSF need to be compliant with these rules from 1 July 2016
The purpose of the regulations
There are two key purposes of the collectables and personal-use assets regulations. They seek to:
1. Prevent SMSF trustees from gaining current-day benefit from a personal-use asset
2. Ensure any personal-use asset is held solely for genuine retirement income purposes.
Which assets do the changes apply to?
The personal items and collectables that need to comply with these regulations include:
- Artwork
- Jewellery
- Antiques
- Artefacts
- Coins and Medallions
- Postage stamps
- Rare folios, manuscripts and books
- Memorabilia
- Wine
- Motor vehicles
- Recreational water vehicles including boats
- Sporting and social club memberships.
How will the changes affect me?
SMSF trustees holding a collectible or personal-use asset in their SMSF must ensure an asset:
1. Is not leased to a related party
2. Is not used by a related party
3. If it is to be sold to a related party, it must be sold at market price, as determined by an independent valuer
4. Is not stored in the private residence of a related party—what’s more, decisions relating to the storage of an item must be documented and retained for at least ten years
5. Is insured in the fund’s name.
