If you hold collectables and personal use assets in your SMSF, then you need to ensure you are aware of the additional requirements that come into force on 1 July 2016.
According to the ATO, collectables and personal use assets are things like artworks, jewellery, vehicles, boats and wine. Because of the nature of these investments, there is a temptation to invest in these items so you can ‘enjoy’ them now rather than for genuine retirement purposes. For this reason the rules were put in place around investing in these items.
For collectables and personal use assets that you held before 1 July 2011 you have until 30 June 2016 to ensure that the items:
- are not to be leased or used by a related party.
- are not stored or displayed in a private residence of a related party.
- comply with all other relevant investment restrictions, including the sole purpose test.
- document by way of minute the decision on where the item is stored.
- are insured in the fund’s name within seven days of the fund acquiring it.
- if the item is transferred to a related party, the transaction must be at market price as determined by a qualified, independent valuer.
For collectables and personal use assets purchased AFTER 1 July 2011, the rules already apply.