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Date of article: 17 June 2011
Last updated: 17 June 2011

Draft rules for SMSF investing in collectables and personal use assets

The draft regulations allow SMSF trustees to continue to invest in collectables, subject to tighter rules as to how they are stored and valued.

The rational behind the new rules is to prevent SMSF trustees from gaining current day benefit from an investment in collectables and personal use assets and ensure that such investments are made for genuine retirement income purposes.

The proposed rules would commence on 1 July 2011.

The new rules

The new rules will apply to collectables and personal use assets acquired on or after 1 July 2011:

  • Disallow a trustee to enter into a lease or lease arrangement with a related party in relation to collectables and personal use assets.
  • Disallow the storing of collectables and personal use assets in the private residence of a related party. The rules do not prohibit storing of collectables and personal use assets in premises owned by a related party provided that the premises is not the home of a related party.
  • Trustee must keep records of the reasons for the decisions on storage.
  • Require the SMSF to insure the collectable item within 7 days of acquisition of the item.
  • Related party is not permitted to use an item of jewellery, a car, a recreational boat or a membership of a sporting or social club.
  • If a collectable item or personal use asset is to be disposed to a related party, it must be at a market price determined by a qualified independent valuer.

Transitional arrangement

The new rules do not apply to a collectable item or personal use asset that is held on 30 June 2011 for a period of 5 years. The transitional period expires on 1 July 2016, at which time the SMSF trustee would be required to comply with all the new rules.

What is covered

The tighter rules will apply to these assets that are taken to be collectables and personal use assets:

  • artwork - includes a painting, sculpture, drawing, engraving or photograph; a reproduction of such a thing
  • 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

(regulation 13.18AA)


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