Collectables and Personal Use Assets

New legislation has placed restrictions on the acquisition and holding of collectables and other personal use assets by Self Managed Superannuation Funds.

Collectables and Personal Use Assets are defined to include:

  • artwork (within the meaning of the Income Tax Assessment Act 1997)
  • jewellery
  • antiques
  • artefacts
  • coins or medallions
  • postage stamps or first day covers
  • rare folios, manuscripts or books
  • memorabilia
  • wine
  • cars
  • recreational boats
  • memberships of sporting or social clubs
  • assets of a particular kind, if assets of that kind are ordinarily used or kept mainly for personal use or enjoyment (not including land)

Restrictions from 1 July 2011:

  • The asset must not be leased to a related party
  • The item must not be stored in a private residence of a related party
  • The decision on storage of the item must be documented & documentation of the decision is to be kept for 10 years
  • The item must be insured in the fund's name within 7 days of acquisition
  • The item must not be used by a related party
  • Transfer of the asset to a related party requires an independent valuation by a qualified valuer

The penalty to Trustees for a breach of these provisions is 10 penalty units. Each penalty unit is currently $110.

Transitional period for existing assets:

The new investment restrictions do not apply in relation to an investment in a collectable or personal use asset held by a SMSF on 30 June 2011. However, this transitional provision ceases on 1 July 2016.

Action Required by Trustees:

If your fund held any of the above investments as at 30 June 2011 you will have until 30 June 2016 to comply with the above restrictions, however in the meantime you will still need to ensure the holding of this investment is consistent with your fund’s Investment Strategy and does not provide pre-retirement benefits to members or related parties.

If you are considering a new investment in any of the above items, please contact our office to discuss whether the new investment restrictions allow for the acquisition and holding of the investment by your SMSF.

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