Safe-deposit box closures causing headaches for SMSFs
With a number of banks ceasing their safe-deposit box services, SMSFs with collectable assets have been forced to look for alternative storage options, according to an SMSF auditor.
In a recent article, Reliance Auditing Services managing director Naz Randeria said the 2021 financial year saw a jump in newly established SMSFs, which has also seen renewed interest in collectable assets.
“We have audited funds that own pink diamonds, rare crystal animals and treasured artefacts including coins and stamps. It’s not just gold bullion or artwork anymore, these liquid assets are becoming more diverse every year,” she said.
Ms Randeria reminded SMSF trustees that these types of assets come with strict storage and insurance requirements.
Historically, many SMSFs have used safe-deposit boxes operated by the major banking institutions to fulfil the storage requirements, she said.
“In recent months, however, Bankwest has been the latest in a line of Australian banks ceasing to offer safety deposit boxes, with the remaining big banks tipped to follow suit,” warned Ms Randeria.
ANZ has already closed a number of its safe-deposit vaults over the past 10 years and is looking to phase out the service nationally. It has not offered the safe-deposit boxes to new customers since 2016.
NAB has also closed its safe-deposit centres in Adelaide, Brisbane, Perth, Melbourne and Sydney.
Ms Randeria said SMSF trustees with these types of boxes are now compelled to find a new storage solution for their SMSF assets.
SMSF trustees should carefully consider whether their next arrangements are compliant and secure, she said.
“Many SMSFs are now forced to reconsider their storage options and the issue of compliance is often not top of mind,” she stated.
“I encourage all of my clients to ensure their compliance does not lapse during this time, to avoid breaches and possible penalties. Maintain your insurance, do your research when selecting your next storage option, and absolutely don’t hold these assets in your home.”
While the Australian market has seen an upswing in privately run storage facilities, these facilities do not have the same regulations as a bank, she cautioned.
“These solutions offer varying degrees of security and peace of mind [and] should be assessed on their individual merits – in line with your own comfort levels given the value of your asset,” she advised.
Some of the factors that trustees should consider when choosing secure storage facilities are accessibility and whether the asset can be stored for a long period.
SMSFs also need to determine whether the facilities are subject to government regulations.
“If not, am I comfortable that the provider is legitimate, professional and able to uphold their promises in regards to the security of my asset?” she stated.
It is also vital that trustees check that the solution will allow them to comply with their “personal use” and insurance obligations under Superannuation Industry (Supervision) Regulation 13.18AA.
“Trustees must exercise caution to ensure their SMSF-owned assets are compliant with all facets of the latest SIS regulations, not just those regarding storage,” she said.
Miranda Brownlee
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.
