A transitional period for dealing with collectables by a self-managed super fund (SMSF) expired on 30 June 2016.
Collectables or personal use assets include works of art, jewellery, antiques and in some cases vintage wine (although one may be excused for thinking that wine is for drinking, not for selling).
These items can no longer be stored on premises owned by a related party (or by the Fund) in circumstances where the collectables can be viewed by a member or related party of a member. Obviously, in the case of jewellery, it can not be worn.
If the Fund has retained these collectables, it would be prudent for the trustees to make a formal minute recording the decision to store the collectables in a particular place, and the reasons for that decision (in particular, verifying the inability for members or related party members to view the collectables).
Although some of the rules below were in place before 1 July 2016, the current position is that:
- the collectable cannot be released to a related party;
- the collectable cannot be stored in a private residence of a related party;
- the trustee must make a formal decision as to where the collectable is to be stored;
- the collectable must be insured within 7 days of acquisition and in the name of the Fund – this means it must be under a separate policy of which the Fund is the only owner; and
- the collectable cannot be used by related parties of the Fund.
If the Fund elects to sell the collectable to a related party, please remember the sale must take place at arms length, for a proper value and it would be wise to have that value determined and certified by an appropriately qualified independent valuer.