Does your self-managed superannuation fund (SMSF) own a vintage motor vehicle, artwork, wine, coins, jewellery or other collectibles?
More stringent rules for how these collectible and personal use assets are managed come into effect for all funds from 30 June 2016. While it’s important for all SMSFs to ensure that they are compliant with the rules, funds with collectibles purchased before 1 July 2011 have had a grace period to get their house in order. This grace period ends on 30 June 2016.
If you have these assets in your fund (or are looking to acquire them), here’s what you need to ensure:
- The asset must not be leased to a related party – a related party includes a member of the fund, their relatives, business partners, the spouse or child of these business partners), or any company or trust that the fund members control or influence.
- The asset must not be stored in the private residence of the related party – this includes sheds and garages etc.
- The trustees must keep a written record of where, how, and why the asset is to be stored.
- The asset must be insured in the fund (trustees) name. If your SMSF is buying a collectible, insurance needs to be in place within the first seven days. If the fund already owns the asset it must be insured in the trustees name before 1 July 2016!
- The asset must not be used by a related party. For example, if your fund owns a vintage car, you cannot drive it for any reason, not even to go to the mechanic.
- If the asset is sold to a related party, the asset must be sold at a market price determined by a qualified and independent valuer.
There are a few issues arising from these requirements. Contact the office today for more information.