The ATO has released guidance on the purchase of pink diamonds under the auspices of an SMSF, more specifically if they are classified as a collectible or as a personal use asset.
The regulator said natural diamonds, including pink diamonds, when held in loose form, are not considered collectable or personal use assets under the superannuation legislation and as such do not have specific storage and insurance requirements.
It stated that trustees and auditors should note these rules only apply to “diamonds held in loose form” which means the diamond cannot in any way be mounted, integrated into or used as an item for adornment or other purposes.
Despite not being subject to specific requirements, the ATO recommends trustees hold adequate insurance and consider appropriate storage arrangements for these types of assets.
As with other investments, the ATO said trustees need to manage their SMSF investments in the best financial interests of fund members and per super laws.
Trustees are free to choose what type of assets their SMSF invests in, providing those investments are not prohibited by the super laws and are permitted by the fund’s trust deed and meet the sole purpose test.
Funds may choose to invest in assets that are classified as collectable or personal use and when they do, these assets have specific storage and insurance requirements.
