SMSFs holding collectables or personal use assets have been prompted to ensure they are able to meet the new rule conditions commencing 30 June in order to remain complying.
“We have the transition rule on collectables finishing this financial year,” AMP SMSF administration head of technical services Philip La Greca told selfmanagedsuper.
“It’s not going to be heavy, but it’s going to get more focus so I expect there will be a bit more action in terms of SMSFs having to actually deal with it.”
Assets acquired before 1 July 2011 have until 1 July 2016 to comply with the new criteria.
“They’ve sort of [acknowledged] that it’s going to happen in 2016 because the grandfathering provisions started in 2011. Well, now it’s here,” La Greca said.
“People usually put it off until they have to do it so there’ll be a bit of kerfuffle around having to do something about their collectables and I’m sure there will be more issues popping up around people figuring out what to do about a particular collectable.
“When the auditors do the 30 June audits, if there’s a collectable in there, they’re going to have to be asking the question of every collectable whether it is insured, where is it stored, et cetera, because effectively they’ll be looking at it post-July. This might be something that may raise a bit of angst.”
As defined by regulation 13.18AA (1) of the Superannuation Industry (Supervision) Regulations, collectables or personal use assets include items such as artwork, jewellery, antiques, artefacts, coins, wine or spirits, and motor vehicles.
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.
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.