Your Self-Managed Super Fund, Collectables and Assets - Time is Running Out
If your SMSF holds collectables and personal assets you may need to take note of a looming deadline, writes Adelaide accountant Tony Vroulis.
You may be aware that Self-Managed Super Fund (SMSF) investments in collectables and personal-use assets must be made for retirement purposes. This means that they are not to be used for personal enjoyment.
To ensure this is the case, new standards have been put in place since 1 July 2011 for all collectables and personal-use assets purchased by Self-Managed Super Funds (SMSF). These regulations applied immediately to all new collectables and personal-use assets acquired after 1 July 2011. However, all existing holdings (including those acquired before 1 July 2011) must comply with these standards or be disposed of by 1 July 2016.
What does this mean for you?
If you own collectables or personal-use assets (such as jewellery, artwork, memorabilia, etc.) through your SMSF, time is running out to make sure that your SMSF complies with the rules set by the Superannuation Industry (Supervision) Regulations 1994 (SISR).
Collectables and personal-use assets;
- cannot be leased to or used by a related party, which includes a member of the fund. For instance, artwork may not be on display on the property of a related party;
- cannot be stored or displayed in a private residence of a related party, including a garage or storage shed on the premises. However, they may be stored on the premises owned by a related party as long as these are completely separate from a private residence;
- must have decisions about their storage documented and kept (for at least 10 years after the decision has been made);
- must be insured in the fund's name within seven days of purchase. For collectables acquired before 1 July 2011, the seven-day rule does not apply - but they must be insured before 1 July 2016;
- must be independently valued if they are transferred to a related party (this applies to items acquired after 1 July 2011. Items acquired before this date may be transferred without being independently valued, provided that this is done before 1 July 2016. Keep in mind that, like all SMSF transactions, this must be on an arm's-length basis. This means that the items are bought and sold at market value).
The deadline is approaching fast, so don't wait! Now is the time to double-check that your collectables and personal-use assets conform to these regulations.
Contact Wallace Vroulis Bond today for more information pertinent to your individual situation.