Collectibles – time is running out
If your SMSF has collectibles that were purchased before 1st July 2011, time is running out to make sure these assets comply with the new requirements. The new rules come into play on the 1st July 2016.
The new rules for collectibles are;
• Not to be leased or used by a related party
• Can’t be stored in a private residence of a related party
• Decisions on the storage of the asset must be documented and the report must be signed and kept
• Collectibles to be insured under the SMSF name.
Asset considered collectibles include but not limited to artwork, classic vehicles, antiques, jewellery and wine.
If your SMSF does own collectibles it is important to take action before the deadline. You should consider reviewing your current leasing arrangements, make decisions about storage and arranging the appropriate insurance needs.
If you are considering disposing of the collectible you are able to do so without a qualified independent valuation if the disposal takes place before the 1st July 2016. The transaction must be on arm’s length terms and can be transferred to a related party. Any disposals on or after the 1st July 2016 are required to get an independent valuation prepared.
If your SMSF has collectibles and you need more information on the new rules please feel free to call;
Martin van der Saag
Director
T: 02 9984 7774
E: martinv@nac.com.au
Cayle Petritsch
SMSF Specialist Advisor
T: 02 9984 7774
E: caylep@nac.com.au
“Collectibles in an SMSF come with strict rules — and the window to comply is closing.”
About the author
Marius Fourie - Director & Business Advisor
As Director and Business Advisor, Marius uses his accounting expertise and empathetic skills to work directly with business owners and help them feel at ease with their finances.
Marius saw a common need in clients that just wasn’t being met by accounting providers.
That need was for clear, open communication and streamlined accounting services that didn’t come padded out with any unnecessary features.
Business owners just don’t have time to compare different accounting firms to see which one has the best packages with the best inclusions (many of which they would pay for but never use).
Key Takeaways
Collectibles Are Heavily Regulated
SMSFs can still invest in collectibles, but only under strict conditions.
Personal Use Is Prohibited
Members and related parties cannot use or enjoy collectible assets held in the SMSF.
Insurance and Storage Are Mandatory
Assets must be insured in the SMSF’s name and stored in a way that meets regulatory requirements.
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Frequently Asked Questions
What are collectibles and personal use assets in an SMSF?
They include items such as artwork, antiques, jewellery, coins, stamps, wine, classic cars and similar assets held for investment purposes.
Why were new rules introduced for collectibles?
The rules were introduced to ensure collectibles are genuinely held for retirement purposes and not for personal enjoyment by members or related parties.
What restrictions apply to collectibles held in an SMSF?
Collectibles must not be used personally, must be insured in the fund’s name, stored appropriately, and cannot be leased to related parties.
What does “time is running out” mean?
SMSFs holding collectibles were given a transition period to meet the new rules, and that deadline means trustees must now be fully compliant.
What happens if my SMSF doesn’t comply?
Non-compliance can result in ATO penalties, forced disposal of assets and potential loss of the fund’s complying status.
What happens if I sell my SMSF collectible before 1 July 2016 — do I still need a valuation?
If you dispose of the collectible before 1 July 2016, you can generally do so without needing a qualified independent valuation, provided the sale is conducted on arm’s length terms.
This disposal can also be transferred to a related party, as long as it remains on arm’s length terms.
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