Collectables and personal use assets – questions and answers

Overview

 

On 1 July 2011 rules were introduced into the Superannuation Industry (Supervision) Act 1993 (SIS Act) for self-managed superannuation fund (SMSF) investments in collectables and personal use assets.

These rules took effect on 1 July 2011. They apply to all collectable and personal use asset investments made by SMSFs on or after that date. If your SMSF held an investment in a collectable or personal use asset prior to 1 July 2011, it has until 1 July 2016 to comply with the rules. This transitional period provides SMSF trustees with existing investments in collectables and personal use assets time to comply with the rules.

What are collectables and personal use assets?

Section 62A of the Superannuation Industry (Supervision) Act 1993 (SIS Act) provides that the regulations may make rules in relation to trustees of self-managed superannuation funds (SMSF) making, holding and realising investments involving collectables and personal use assets.

Regulation 13.18AA (1) specifies the assets that are taken to be collectables and personal use assets as:

  • artwork (within the meaning of the Income Tax Assessment Act 1997 (ITAA97))
  • 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.

Artwork is defined as a painting, sculpture, drawing, engraving or photograph, a reproduction of such a thing, or property of a similar description or use. Coins and bank notes are collectables if their value exceeds their face value. Spirits includes, but is not limited to, whiskey, gin, vodka, tequila, brandy and rum. Motor vehicles include, but are not limited to, motor cars and motor cycles.

So, what are the rules?

As previously noted, it is important to remember the rules do not replace or supersede any existing requirements imposed by superannuation law in respect of your fund’s investments. That is, your fund is still required to comply with all existing legislative requirements, including the sole purpose provisions.

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SPAA Specialist Auditor

SPAA Specialist Auditor

Shiv Parihar is a SMSFA accredited SMSF Specialist Auditor™. He provides SMSF auditing services independently, conflict free and in accordance with professional audit standards.

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