News

ATO, Compliance & Regulation, SMSF

Raw diamonds not personal use assets

ATO diamonds SMSF personal use asset collectable

The ATO has provided guidance on the status of pink diamonds inside an SMSF and has noted trustees should give proper consideration to how they are insured and stored.

Pink diamonds are not considered collectable or personal use assets within an SMSF, but should be stored and insured appropriately regardless, according to the ATO.

The regulator provided the guidance after receiving inquiries as to the status of pink diamonds inside an SMSF, noting superannuation law dictated how they would be treated.

“Natural diamonds (including pink diamonds), when held in loose form, are not considered collectable or personal use assets under the superannuation legislation and as such do not have specific storage and insurance requirements,” it said.

ATO guidance released in 2021 stated collectable or personal use assets are limited to artworks, 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 and motorcycles, recreational boats and memberships of sporting or social clubs.

As such, in its latest guidance, it added: “Trustees and auditors should note these rules only apply for ‘diamonds held in loose form’. This means the diamond cannot in any way be mounted, integrated into or used as an item for adornment or other purposes which would be inconsistent with the holding of the diamond in loose form for investment purposes.”

While noting SMSFs were free to choose what type of assets they held, it said funds were still restricted by superannuation law, the trust deed and the sole purpose test when deciding to hold assets such as diamonds.

It also encouraged SMSFs holding diamonds to consider how these assets were being stored and insured.

“Funds may choose to invest in assets which are classified as collectable or personal use and when they do, these assets have specific storage and insurance requirements,” it said.

According to the ATO website, this includes insuring the assets in the name of the fund within seven days of acquiring them and not storing them in the private residence of any related party.

“Despite [diamonds] not being subject to specific requirements, we would recommend trustees hold adequate insurance and consider appropriate storage arrangements for these types of assets. These are sound practices when protecting a fund’s assets,” it said.

''

Our Story

selfmanagedsuper is the definitive publication covering Australia’s SMSF sector. It uniquely offers online content tailored separately for SMSF professionals and individual trustees participating in the fastest growing and largest sector of the superannuation industry. As such, it is a must read for those wanting to stay informed about the latest news, regulatory developments, technical strategies, investments, compliance, legal and administration issues concerning SMSFs.

Copyright © SMS Trustee News 2024

ABN 43 564 725 109

Benchmark Media

Site design Red Cloud Digital