As you may know, new rules with respect to collectables and personal use assets were introduced from 1 July 2011.
Whilst those rules only applied to acquisitions of collectables and personal use assets from 1 July 2011, for funds that held those assets as at 30 June 2011 SMSF Trustees were given to 30 June 2016 to comply with the new rules.
So, if your Fund currently has collectables and personal use assets which were held at 30 June 2011 you need to ensure they are:
• Not being used by related parties;
• Not being stored in the private residence of related parties;
• Not being leased to related parties; and
• Insured in the name of the Fund.
In addition, SMSF Trustees must document the reasons behind their decisions on storage and these must be kept for a period of at least 10 years.
We note that many SMSF Trustees have chosen to transfer or sell these assets out of the fund during the transition period. Whilst it is permitted that these assets may be transferred to a related party, the relevant transfer must be on arms-length terms.
It is important to note that if these assets are to be realised post 30 June 2016 and a related party receives an interest in the asset as a result then the market price must be determined by a qualified independent valuer.
It is therefore important to act soon to ensure compliance is achieved by 30 June 2016. Contact WMS for further information.
DISCLAIMER: This article is intended to provide a general summary only and should not be relied on as a substitute for professional advice.