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ATO Reminds Deadline for SMSFs and Collectibles

The Australian Tax Office (ATO) reminds owners of self-managed super funds (SMSFs) with collectibles and personal-use assets purchased before 1 July 2011 to comply with SMSFs rules before the deadline on 30 June 2016.

With stricter rules and regulations (to take effect on 30 June 2016) on how these collectibles and assets are managed, SMSFs trustees need to ensure that their fund meets the requirements of the law.

ATO defines collectibles and personal-use assets as things such as jewelry, artworks, vehicles, antiques, postage stamps, wine, and even memberships of sporting or social clubs. Investments on these items should only be made genuinely for the purposes of retirement only, and not for any present-day benefit.

The rules for these assets that SMSFs need to comply with are:

  • The asset must not be leased to a related party such as another member of the fund, relatives of the trustees, business partners (including their relative), or any enterprise that the trustee has control or influence over.
  • The assets should not be stored or displayed in a private residence. They, however, can be stored (but not displayed) in the premises of a related party, provided that the property is not their private residence.
  • Records (such as minutes of a meeting of fund members) about the decision of storing the assets should be secured.
  • Collectibles and personal-use assets in the SMSFs must be insured in the fund’s name within a week (7 days) of acquiring them. Funds that already own assets, but are not yet insured have until 1 July 2016 to have them covered by insurance.
  • Assets in the SMSFs cannot, for any reason, be used by related parties. For example, a related party driving a vintage car for restoration or maintenance is not permitted, as this reflects using the asset. An individual who is not a related party, however, can drive the vehicle for such purposes.

One issue that trustees might face with ATOs requirements is obtaining insurance within 7 days of purchase. Also, should the fund decide to sell an item, the collectible should be valued by a qualified independent valuer.

Given that SMSFs members have been given five years to manage their collectibles in their funds appropriately, ATO expects strict compliance with this rule. Penalties will take place on or after 1 July 2016.

If you are unsure or have any questions regarding these deadlines, please contact our Senior Superannuation Accountant on 08 9301 2200.

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