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Technical Update: Collectable Rule Changes – March 2015

Are you and your clients ready for 1 July 2016?

1 July 2016 sees the expiration of transitional provisions for collectable and personal use assets. These provisions apply only to assets held by a Self Managed Superannuation Fund prior to 1 July 2011.

What is a collectable?
SIS Regulation 13.18AA(1) defines collectables and personal use assets as:

What are the new rules and what does it mean for your client’s SMSF?

Collectable and personal use assets held prior to 30 June 2011 were granted a 5 year transition period to comply with the new regulations.

The new rules took effect from 1 July 2011, so all new collectable and personal use assets acquired since then (and from 1 July 2016, ALL collectable and personal use assets):

For example, if an SMSF invests in artwork it cannot be displayed in the business premises of a related party where it is visible to clients and employees.However, you can store collectables and personal-use assets in premises such as purpose-built storage facilities which are owned by a related party, provided the premises are not part of the private residence of the related party and the assets are not on display.

An SMSF can lease artwork to an art gallery provided the gallery is not owned by a related party and the lease is on arm’s-length terms.

The artwork must be insured in the name of the SMSF, irrespective of the art gallery’s own insurance policies.

SMSF investments in motor vehicles, in addition to restrictions on display and storage, cannot be driven by a related party, even for maintenance purposes or to have restoration work done, as this constitutes use of the asset.

In addition to restrictions on the storage and use of collectables:

Practical implementations – tips and traps

More Information

If you need assistance with the upcoming change to collectable and personal use assets, please do not hesitate to email us or phone (03) 9886 0800.

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