New regulations take the ‘fun’ out of Super Funds

Draft regulations released yesterday will allow SMSF trustees to continue to invest in collectables, subject to tighter rules as to how they are stored and valued.

“The new rules will ensure that these investments are genuinely made for retirement income purposes and not for trustees’ personal enjoyment,” said Assistant Treasurer and Minister for Financial Services and Superannuation Bill Shorten.

“The Gillard Government recognises that collectables like artworks can be legitimate investment class, but acknowledges concerns over such assets attracting superannuation’s concessional tax treatment while being available for ‘personal benefit’ – for example, being displayed in the home of a super fund member.”

The draft regulations were applauded by the Self Managed Super Fund Professionals’ Association.

 “SPAA believes self managed super funds should have freedom of investment choice and, as such, we are pleased that they will continue to be permitted to invest in collectables, such as artwork,” said Andrea Slattery, SPAA CEO.

The draft regulations are broadly in line with best practice guidelines released by SPAA last year in response to the Cooper Review recommendation to ban SMSF holding collectables and personal use assets.

“The draft regulations provide much needed clarity for self managed super fund members on important issues such as how these collectables and personal use assets are to be purchased, stored and documented so they can be used to generate retirement income,” Slattery said.

“We have always maintained that providing further clarity around how these types of assets should be stored and valued is a much better approach than banning them outright in a SMSF.”

The new draft regulations define collectables and personal use assets as artwork (within the meaning of the Income Tax Assessment Act 1997); jewellery; antiques; artefacts; coins or medallions; postage stamps or first day covers; rare folios, manuscripts or books; memorabilia; wine; cares; recreational boat and membership of sporting or social clubs.