SMSF's that hold collectables or personal use assets including paintings, coins, antiques, artifacts, memorabilia, recreational boats, jewellery, books, wine or motor vehicles acquired before 30 June 2011, should be aware of significant changes that will take effect on 1 July 2016.
A new set of rules will be rolled out for SMSF’s and investors should be aware of the rules to protect their investment and ensure their collectables have the appropriate level of documentation, insurance and legal support.
Collectables are a great way for individuals to invest ahead of retirement and while they don’t provide immediate benefit, they are an attractive investment for self-managed super funds.
All collectables in funds will now have to comply with the following regulations:
• Storage decisions must be documented and kept for ten years. This can be minutes of a meeting of the trustees.
• All collectables must have appropriate insurance in the SMSF's name within seven days of purchase.
• Collectables must not be used in any way by any related parties of the SMSF.
• They cannot be stored or displayed in the residence of a related party. According to the ATO, this extends to business locations as well.
• They also cannot be leased to a related party.
• If a collectable is sold after 1 July 2016 to a related party, it must be valued at market price as determined by independent valuation.
The ATO released the following statement regarding the upcoming changes "collectables and personal use assets can't be leased to, or part of a lease arrangement with, a related party used by a related party stored or displayed in a private residence of a related party.” Visit the ATO website for more information.
