If you have a self-managed superannuation fund (SMSF) be aware of changes to the personal asset rules. From 1 July 2016, the personal asset rules will apply to all collectables and personal use assets held by SMSFs. Previously these rules only applied to assets acquired by SMSFs after 1 July 2011.
The personal asset rules are designed to ensure that investments held by your SMSF are for genuine retirement purposes, rather than to provide a present-day benefit. Assets covered include things like coins, stamps, artwork, jewellery, antiques, wine, motor vehicles, recreational boats and memberships of sporting or social clubs.
Under the rules, collectables and personal use assets can’t be:
• Leased to, or part of a lease arrangement with, a related party;
• Used by a related party; or
• Stored or displayed in a private residence of a related party.
• The investment must comply with all other relevant investment restrictions, including the sole purpose test;
• The decision on where the item is stored must be documented and the written record kept;
• The item must be insured in the fund’s name within seven days of the fund acquiring it; and
• If the item is transferred to a related party, this must be at market price as determined by a qualified, independent valuer.
Note that a related party includes relatives of the SMSF members and any partnerships, partners of partnerships and trusts and companies that the SMSF members control.
Take the time to make sure that your SMSF complies, as failure to comply may result in penalties.
If you would like further information, talk to your financial adviser.