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