Now might be a good time to review the assets held within your SMSF and make sure that your fund complies with the rules that began on 1 July 2011, if it holds collectables or personal use assets.
Collectables purchased prior to 1 July 2011 have- for the last 5 years- had special transitional rules apply to them that come to an end on 30 June 2016.
Collectable and Personal Use Assets can include items such as: jewellery, wine and cars. The type that we encounter the most is artwork owned by a SMSF. Trustees investing in these types of assets must be able to demonstrate that the investment is for the purpose of providing benefits in retirement.
The new rules require the following and need to be in place well before 30 June 2016:
- The Collectable must be insured in the fund’s name, not with assets insured in the members’ names.
- The Collectable cannot be stored at a member’s residence or business premises. The trustees must document their decisions regarding the storage of the asset.
- The Collectable cannot be leased to a related party.
- If sold to a related party, the value of the sale must be based on a professional valuation, not on a trustee’s valuation.
The ATO has indicated that this will be an area of interest for them in the 2016/17 financial year. Please review the investments held by your SMSF and contact us if you require any assistance at: SMSF@bishopcollins.com.au
The information presented in this document was prepared for discussion purposes only and should not be relied upon for decision making. You should consult a professional financial adviser if you require additional information. This information has been prepared by Bishop Collins Wealth Management Pty Ltd – Financial Services (Corporate Authorised Representative (No 1242273) of Primestock Securities Ltd ABN 67 089 676 068 Australian Financial Services Licence 239180).