SMSF - Changes to the Rules around Investments in Collectables & Personal Assets

Dated: June 2011

On 24 March 2011 the Assistant Treasurer and Minister for Financial Services and Superannuation introduced legislation into Parliament that will affect Self Managed Superannuation Funds (SMSFs) that hold these types of investments.

This measure, if passed by parliament, will apply to all new investments from 1 July 2011. All existing holdings of collectables and personal use assets will have until 1 July 2016 to comply with the new standards.

In short, collectables and personal use assets will only be allowed to be held provided they meet the requirements set out in the regulations.

The term ‘collectable and personal use assets’ includes:

(a) artwork (within the meaning of the Income Tax Assessment Act 1997);
(b) jewellery;
(c) antiques;
(d) artefacts;
(e) coins or medallions;
(f) postage stamps or first day covers;
(g) rare folios, manuscripts or books;
(h) memorabilia;
(i) wine;
(j) cars;
(k) recreational boats;
(l) memberships of sporting or social clubs.

The proposed amendments will ensure investments in collectables and personal use assets by SMSFs do not give rise to a personal benefit for SMSF trustees, but are held for the sole purpose of providing retirement benefits.

SMSF trustees must comply with the rules set by the regulations in relation to investments in collectables and personal use assets in addition to the rules such as in-house assets rules that apply to some or all other assets.

The new rules provide for an automatic fine as soon as a breach occurs, so it is important to ensure that they are fully understood and complied with at all times.

Please contact us if you require further information.