SMSFs – New Rules for Collectibles and Personal Assets

SMSFs – New Rules for Collectibles and Personal Assets

From 1 July 2016, new rules for SMSFs holding or seeking to acquire collectible and other personal assets came into effect.  From this date all collectibles and personal use assets held by a SMSF will have to comply with the new rules which state that the trustee of a SMSF must:

  • not lease the collectible/personal asset to a related party;
  • not store the collectible/personal asset at a private residence of any related party;
  • document in writing the reason for storage of the collectible/personal asset and keep that written record for 10 years;
  • insure the collectible/personal asset in the name of the SMSF within 7 days of acquisition ;
  • ensure that the collectible/personal asset is not used/enjoyed by any related party of the SMSF; and
  • ensure that if the collectible/personal asset is sold to a related party, that sale occurs at a market price, determined by a qualified independent valuer.

The following are considered to be collectibles and personal use assets in a SMSF:

  • artwork (as defined by the Income Tax Assessment Act 1997 to include a painting, sculpture, drawing, engraving or photograph, or a reproduction of these items, or property of a similar description or use);
  • jewellery;
  • antiques;
  • artefacts;
  • coins, medallions or bank notes (gold bullion bars are not classified as a collectible or personal use asset);
  • postage stamps or first day covers;
  • rare folios; manuscripts or books;
  • memorabilia;
  • wine or spirits;
  • motor vehicles;
  • recreational boats;
  • memberships of sporting or social clubs.

A related party of the fund includes the members of the SMSF, relatives of the SMSF members, and any partnerships, partners of partnerships (where a member is in partnership with them) and trusts and companies that a SMSF member controls.

Accordingly, a SMSF can continue to hold or acquire collectibles and other personal assets provided that the new rules are complied with.

 

Submitted by Minakshi Rohit

 

Antique golden frames collection on white background. Gallery wall ideas. Middle object with clipping pathiStock_101283105_SMALL

 

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