SMSFs holding collectables need to ensure they are compliant under the incoming regulations applicable from 1 July 2016, as the deadline did not leave much time for planning due to the nature of those assets, according to a specialist SMSF lawyer.
“There is a deadline coming up of mid-2016 and with a lot of these things, you don’t want to leave it to the last moment,” DBA Lawyers director Dan Butler said.
“Regulation 13.18AA (1) of the Superannuation Industry (Supervision) Regulations commenced on 1 July 2011 and specifies the following assets are taken to be collectables and personal use assets: artwork, jewellery, antiques, artefacts, coins, medallions or bank notes, postage stamps or first day covers, rare folios, manuscripts or books, memorabilia, wine or spirits, motor vehicles, recreational boats, memberships of sporting or social clubs.”
Assets acquired before 1 July 2011 had until 1 July 2016 to comply with the new criteria.
“For a lot of funds it’ll mean getting rid of the collectables, which requires an independent valuer to offload those, but it is important to work out your strategy,” Butler said.
From 1 July 2016, collectable items must not be leased to or used by a related party and must not be stored at the private residence of a related party.
Furthermore, the decision regarding the storage of the item must be documented and a record of the decision maintained for at least 10 years.
The item must also be insured in the fund trustee’s name within seven days and if the item is transferred to a related party, the related party must acquire the item at market value as determined by a qualified independent valuer.