If your SMSF has investments in collectables or personal-use assets that were acquired before 1 July 2011, time is running out to ensure your SMSF meets the requirements of the Superannuation Industry (Supervision) Regulations 1994 (SISR) for these assets.
From 1 July 2011, investments in collectables and personal-use assets have been subject to strict rules under regulation 13.18AA of the SISR.
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.
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.
If you are considering disposing of these items, they can be transferred to a related party 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.
Trustees have had since July 2011 to make arrangements so we expect you will have ensured the requirements are met before the deadline. If this isn't the case, you need to take steps now as there are penalties for breaking the rules