The ATO has issued a stern warning to SMSFs with collectible assets ahead of rule changes that come into effect on 1 July this year.
Following the 2010 Cooper Review, the rules relating to ownership of collectibles in an SMSF have been tightened.
Under the new rules, there are a series of investment standards that need to be met by the SMSF holding the collectibles, including that the asset cannot be stored in a private residence of a related party. In addition, there must be a documented decision about asset storage.
Most significantly, the collectible must be insured in the fund’s name within seven days of the SMSF acquiring it.
Speaking at the SMSF Association’s national conference in Adelaide last week, the ATO’s Kasey Macfarlane said the commissioner is not going to be sympathetic to those who have not met the new standards.
She noted there has been a five-year transitional period, which has given SMSF trustees ample opportunity to reassess or restructure their collectibles holdings.
The ATO’s advanced levels of data intelligence means trustees are more likely to get caught under these new rules if they are non-complying, Ms Macfarlane said.
She also added that it’s worth reviewing whether it’s worthwhile for your clients to be holding collectibles in their SMSF given the additional costs and restrictions under the new rules.
The SMSF Association’s Graeme Colley had previous told SMSF Adviser that considering the recommendation from the Cooper Review was to do away with SMSFs investing in collectibles and artworks, it would be reasonable to expect that there will be no extension to the transitional period for those artworks and collectibles held by funds as at 30 June 2011.
“While this may create some issues for some artworks and collectibles in relation to insurance and storage, trustees have had many years to make adjustments to the fund investments,” Mr Colley said.
Mr Colley further noted that the holdings of artworks and collectibles by SMSFs have decreased from a peak of $731 million in March 2012 to the June 2015 level of $389 million.
SUBSCRIBE TO THE SMSF ADVISER BULLETIN
6 Dec 2016RBA announces cash rate decisionBy Staff Reporter
6 Dec 2016Basic failings seeing SMSF auditors scrappedBy Stephanie Deller
6 Dec 2016Retirement costs outpace rise in CPIBy Stephanie Deller
6 Dec 2016Accountants ‘sticking their head in noose’ on licensingBy Miranda Brownlee
5 Dec 2016Recent super fund benefit decision a lesson for SMSFsBy Miranda Brownlee
5 Dec 2016Super changes tipped to hit 300,000 pensionersBy Staff Reporter
- view all
Accountants ‘sticking their head in noose’ on licensing
The combination of licensing changes and the superannuation reforms has left some accountants in a dangerous position, with many firms force...read more
- view all