Investments in Art and collectibles within your Self-Managed Super Fund (SMSF) must be held for genuine retirement purposes and cannot provide any present- day benefit. Collectables and personal use assets include, artworks, jewelry, vehicles, boats, sporting memorabilia and wine.
As these investments must be held for retirement purposes they cannot be:
- – leased to, or part of a lease arrangement with, a related party
- – used by a related party
- – stored or displayed in a private residence of a related party.
As well as being subject to the normal Superannuation legislation, regarding the sole purpose test, a new valuation every three years, and documenting any decisions in relation to the investment.
Art and Collectibles must also be insured in the fund’s name within 7 days of acquiring and if the item is transferred to a related party this must be determined by a qualified independent valuer.
These rules apply to new assets purchased after 1 July 2011, BUT from 1 July 2016 they apply to art and collectibles that were acquired prior to that date.
Trustee’s holding any artwork and collectibles should ensure that they are in a position to comply with these changes by 1 July 2016, or maybe consider transferring the assets out or have a member purchase the asset from the SMSF at market value, if the new rules prove too onerous for compliance.
This information is general information only. You should consider the appropriateness of this information with regards to your objectives, financial situation and needs.