Tax office issues warning on imminent rule change

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 theSMSF 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 previously 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.

MIRANDA BROWNLEE & KATARINA TAURIAN
Tuesday, 23 February 2016
accountantsdaily.com.au

Cristy Houghton

Embarketing, 48 Johnston Street, Wagga Wagga, NSW, 2650

Cristy's unique career has taken her from country NSW to the city lights of Clarendon Street South Melbourne and back again. With an early career in radio as a copywriter and creative strategist, she is now a Jill of all trades as a graphic designer, website builder, blog writer, video editor, social media manager, marketing strategist and more. 

In fact, give her any task and this chick will figure out how to do it! Go on, we dare you!

No, really, we DARE you!!

Cristy has won two Australian Commercial Radio Awards (ACRAs) for Best Ad and Best Sales Promotion, and even has an 'Employee of the Year' certificate with her name on it.

Cristy and her husband James have traveled extensively through Russia, China and South East Asia, and have two fur-babies, Sooty (cat) and Panda (puppy). Cristy loves drinking coffee, meeting people to drink coffee, coffee tasting and coffee flavoured cocktails. She also enjoys road trips, TED Talks and watching cat videos on youtube.