Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 104

Collectable and personal use assets in SMSFs

Did your SMSF purchase fine wine, a vintage car, a jet ski, or artwork prior to 1 July 2011? It must have seemed like a dream come true to be able to invest in your passion through your SMSF and then enjoy your investment. Sadly, the dream is over. In less than 15 months, by 1 July 2016, your investment is something you can no longer enjoy.

“Why is this so?” you ask.

The sole purpose of superannuation is to provide retirement and ancillary benefits to members. By investing in and enjoying a collectable or personal use asset, SMSF members gain a pre-retirement benefit that goes against the spirit of the sole purpose test. As a result, the superannuation law was tightened from 1 July 2011, so that any collectables and personal use assets acquired by an SMSF from this date onwards cannot be used by or leased to members of the SMSF.

Additionally, these assets cannot be stored in a private residence of any member, nor displayed at a member’s place of business as this would mean the assets are being used by the member. You can, however, use certain premises owned by a member such as a storage facility. The trustees of the SMSF must document their decision on where the assets are stored and keep their documented decision for ten years. On top of that, trustees have to take out insurance for these assets within seven days of their SMSF acquiring them.

The government provided a five year transitional period for SMSFs that acquired these assets prior to 1 July 2011. These SMSFs do not have to comply with the new restrictions until 1 July 2016. If you are currently enjoying these items, come 1 July 2016, you will have to comply with the new requirements. You can also no longer lease them from your SMSF.

What happens if you don’t comply with the new restrictions?

Non-compliance with the law is an offence that can result in a fine of $1,700 for each trustee of an SMSF. Not only that, the Tax Office can also take other compliance actions on you and your SMSF.

So don’t leave things to the last minute. You need to think about whether you want to comply with the superannuation law requirements or sell these assets. If you decide to purchase these assets from your SMSF yourself, then you will need to do so at the market rate prior to 1 July 2016. If you purchase them from your SMSF on or after 1 July 2016, then you will need to have them independently valued prior to the purchase.

 

Monica Rule is an SMSF Specialist and author of The Self Managed Super Handbook. See www.monicarule.com.au. This article is general information and does not address the circumstances of any individual.

 

  •   10 April 2015
  •      
  •   

 

Leave a Comment:

RELATED ARTICLES

Meg on SMSFs: Where are the risks in our major super sectors?

What is the new work test exemption?

7 vital steps to compliance for your SMSF

banner

Most viewed in recent weeks

Why have Australian living standards 'fallen' and how do we fix it?

For the last few years there has been much talk of a 'cost-of-living' crisis in Australia and of 'falling living standards'. Lately this has flared up again with the pickup in inflation resulting in a renewed fall in real wages.

Will you run out of money in retirement?

Fear of running out has become a defining retirement anxiety. Why do some retirees die with substantial wealth while others deplete their nest egg? Evidence suggests the answer is more complicated than we think. 

Four options for an income investor’s next dollar

What if Australia’s golden age of dividends is ending? Rather than overhaul your portfolio, it may be worth considering where new capital can work harder. I discuss four income strategies and the trade-offs behind each.

Why spending more in early retirement can improve lifetime income

Conventional wisdom encourages retirees to preserve superannuation. But if those likely to qualify for the Age Pension later in life spend a little more today, it may deliver higher lifetime income and a more stable retirement.

The investment that sidesteps the new tax traps

Tax rules have changed, but many investors are still using yesterday’s strategies. Insurance bonds may offer advantages for those seeking greater control, tax efficiency and certainty about their wealth.

Testamentary trusts have secured the CGT exemption

Treasury’s latest CGT reform draft delivers a win for testamentary trusts and deceased estates, exempting estate-derived gains from the 30% floor. However, questions on death and divorce rollovers remain unresolved.

Latest Updates

Shares

Is it time to bail on Australian stocks?

For generations, Australian investors have backed banks, miners and dividends. But has that loyalty come at a cost? A look at the numbers raises an uncomfortable question about where future returns will come from.

Investment strategies

Making a case for the 40 year mortgage

The housing debate tends to focus on prices, interest rates and deposits. Yet an overlooked feature of the mortgage itself could help buyers enter the market sooner without abandoning prudent lending standards.

SMSF strategies

Red flags to watch out for when considering an SMSF

Thinking about an SMSF? Before you sign anything, learn how to spot the difference between genuine advice and a sales pitch, understand the real costs, and avoid the compliance mistakes that attract ATO attention.

Investment strategies

Not all income is created equal

Market conditions are shifting as familiar yield sources quietly lose momentum. Australian public credit may be the most compelling source of income in today's market but many investors haven't noticed the shift. 

Investment strategies

The market paid for change, not comfort

Reporting season has delivered a clear message: the market is no longer paying simply for quality, resilience or an earnings beat. It is paying for change in earnings expectations and the outlook ahead. 

Investment strategies

Will AI destroy investor capital?

Some of history's most important innovations changed the world while leaving investors much poorer. As trillions pour into AI, a familiar pattern may be emerging, one that rewards society far more generously than capital.

ASX reporting season: Signals, surprises, stock stories

August reporting season delivered strong earnings and bigger-than-expected dividends, but beneath this, a more nuanced story emerged. First Sentier Investors’ David Wilson and Christian Guerra unpack the key trends.

Sponsors

Alliances

  • ASA-Logo-RGB-ActiveGreen-web.png

© 2026 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.