Does your SMSF own artwork, antiques, coins or other collectables ?
Were any of these investments acquired before 1 July 2011? If yes, you need to be aware of the 1 July 2016 deadline that has passed for SMSF’s with “old collectables” (acquired before 1 July 2011).
The deadline relates to SMSF’s having to satisfy the five rules in respect of collectables which were purchased before 1 July 2011. These rules were introduced in July 2011, however a five-year transitional period was given before the rules applied to collectables which were acquired before July 2011.
SMSF’s had to comply with the five collectables’ rules since 1 July 2011 in respect of collectables acquired on or after 1 July 2011.
What is a collectable?
The definition of collectables includes:
Artwork
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.
What is not a collectable?
Valuable metal (gold or silver) and gemstones are not collectables.
What are the 5 collectable rules?
Rule 1) A collectable cannot be leased to or used by a related party;
Rule 2) A collectable cannot be stored or displayed in a private residence of a related party;
Rule 3) The decisions of the trustee as to the storage of collectables must be documented and the written document kept:
Rule 4) Each collectable must be insured in the name of the SMSF and the insurance must be effected within seven days of 1 July 2016;
Rule 5) If a collectable is transferred to a related party, the value used for the transaction must be a value provided by a qualified independent valuer.
These rules were introduced in July 2011, however a five-year transitional period was given before the rules applied to collectables which were acquired before July 2011.
The five-year transitional period ended on 1 July 2016.
Each individual trustee (or if a corporate trustee, the company itself) will be liable for penalties if any of the collectables rules are breached. Please contact Optima Partners if you require more information regarding your collectables.
PETRO GROENEWALD
SNR SMSF ACCCOUNTANT
