A Self Managed Superannuation Fund (‘SMSF’), which has investments in collectables or personal-use assets that were acquired before 1 July 2011, has to meet the requirements of the Superannuation Industry (Supervision) Regulations 1994 (SISR) for these assets.

Assets considered collectables and personal-use assets include things like artwork, jewellery, antiques, vehicles, boats and wine. Investments in such items must be made for genuine retirement purposes and not provide any present-day benefit.

From 1 July 2011, investments in collectables and personal-use assets have been subject to strict rules under regulation 13.18AA of the SISR. The rules require that:

  • items can’t be leased to or used by a related party
  • items can’t be stored or displayed in a private residence of a related party
  • decisions about storage must be documented and the written record kept
  • items must be insured in the fund’s name within seven days of acquisition.

In addition, if the item is transferred to a related party, a qualified independent valuation is required.

Investments held before 1 July 2011 have until 1 July 2016 to comply with the rules. If your SMSF has such investments, you need to consider your situation carefully and take appropriate action before 1 July 2016.

Action may include reviewing current leasing agreements, making decisions about storage and arranging insurance cover.

A transfer of such items to a related party may be made without a qualified independent valuation, but only if the transfer takes place before 1 July 2016 and the transaction is made on arm’s-length terms.

[ATO reminder] [SIS Reg 13.18AA] [LTN 41, 2/3/16]