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27 July 2011

Can your SMSF buy artwork?

Why stop at art?  What about collectors items - some fine wine perhaps?  Or, a few antiques?

The answer is yes you can (as long as the asset is genuinely for retirement income purposes, not for your personal use now, and not acquired from a related party) but the Government is looking closely at what SMSF's acquire and how those assets are managed.

Recently, the Government released draft regulations that will guide what and how SMSFs buy, sell, and manage collectibles.  The regulations seek to ensure that trustees do not gain a benefit from those assets now.  For example, you cannot hang artwork purchased by your SMSF on your wall at home or wear jewellery acquired by the fund.  This is because the Superannuation Industry Supervision Act (SIS) requires that all assets acquired by a SMSF are used for retirement purposes only.  If you are using the assets now, you breach SIS as the asset is not exclusively for retirement purposes. 

Storage of collectibles owned by your SMSF will be a major issue as it will be important to show that you are not benefiting from the asset now – so no storing the asset at home or in the home of a related party.  Nor can you arrange to lend the asset to a related party, even if the asset is being rented.

The regulations cover collectable and personal use assets include artwork; jewellery; antiques; artefacts; coins or medallions; postage stamps or first day covers; rare folios, manuscripts or books; memorabilia; wine; cars; recreational boats; and memberships of sporting or social clubs.

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The above is an extract from the publication "Your Knowledge" a newsletter service we have subscribed to as an additional resource
This Newsletter, of necessity, has dealt with matters of a technical nature in general terms only. Clients should contact us for detailed information on any of the items in the Newsletter. No responsibility for loss occasioned to any person acting or refraining from acting in reliance upon any material in this Newsletter can be accepted by any member or employee of the firm.

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