One of the reasons SMSFs have rocketed in popularity over the last few years is that they allow investors total control over where they invest their retirement savings. But what happens if you want to invest in assets that are a little more exotic than property or shares – namely, what the Australian Taxation Office (ATO) terms “collectibles and personal use assets”?
What are collectibles and personal use assets
This category refers to items like artwork or vintage cars. Such assets run the gamut from jewellery, antiques and coins, to stamps, wine and even club memberships.
SMSFs are allowed to invest in these kinds of assets. However, there are strict rules they have to follow.
What are the rules?
As with anything SMSF-related, the rules surrounding collectibles and personal use assets are many and stringent. For one, the items cannot be used by or leased to any related party of the fund. As an example of how strict the rules are, the ATO has taken the position that cars invested in by an SMSF cannot be driven by a related party, even if it’s to have the car serviced.
Assets also cannot be stored or displayed in the private residence of any related party of the SMSF. Wherever the trustees do decide to store them, they must document in writing the reason behind this decision, and store this record for 10 years.
Finally, within seven days of acquisition, the asset must be insured in the name of the SMSF. If ownership of it is transferred to a related party, it must be valued by a qualified independent valuer.
Who do I go to to find out more?
When it comes to an SMSF, every case is different. If you need extra help with your SMSF and determining whether your fund is complying with the rules surrounding such assets, talk to an SMSF service provider. At Aquila, our experienced SMSF advisers can answer all of your questions and guide you through the process.