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.

 


 

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

Australian house prices close in on world record

Sydney is set to become the world’s most expensive city for housing over the next 12 months, a new report shows. Our other major cities aren’t far behind unless there are major changes to improve housing affordability.

The case for the $3 million super tax

The Government's proposed tax has copped a lot of flack though I think it's a reasonable approach to improve the long-term sustainability of superannuation and the retirement income system. Here’s why.

7 examples of how the new super tax will be calculated

You've no doubt heard about Division 296. These case studies show what people at various levels above the $3 million threshold might need to pay the ATO, with examples ranging from under $500 to more than $35,000.

The revolt against Baby Boomer wealth

The $3m super tax could be put down to the Government needing money and the wealthy being easy targets. It’s deeper than that though and this looks at the factors behind the policy and why more taxes on the wealthy are coming.

Meg on SMSFs: Withdrawing assets ahead of the $3m super tax

The super tax has caused an almighty scuffle, but for SMSFs impacted by the proposed tax, a big question remains: what should they do now? Here are ideas for those wanting to withdraw money from their SMSF.

The super tax and the defined benefits scandal

Australia's superannuation inequities date back to poor decisions made by Parliament two decades ago. If super for the wealthy needs resetting, so too does the defined benefits schemes for our public servants.

Latest Updates

Planning

Will young Australians be better off than their parents?

For much of Australia’s history, each new generation has been better off than the last: better jobs and incomes as well as improved living standards. A new report assesses whether this time may be different.

Superannuation

The rubbery numbers behind super tax concessions

In selling the super tax, Labor has repeated Treasury claims of there being $50 billion in super tax concessions annually, mostly flowing to high-income earners. This figure is vastly overstated.

Investment strategies

A steady road to getting rich

The latest lists of Australia’s wealthiest individuals show that while overall wealth has continued to rise, gains by individuals haven't been uniform. Many might have been better off adopting a simpler investment strategy.

Economy

Would a corporate tax cut boost productivity in Australia?

As inflation eases, the Albanese government is switching its focus to lifting Australia’s sluggish productivity. Can corporate tax cuts reboot growth - or are we chasing a theory that doesn’t quite work here?

Are V-shaped market recoveries becoming more frequent?

April’s sharp rebound may feel familiar, but are V-shaped recoveries really more common in the post-COVID world? A look at market history suggests otherwise and hints that a common bias might be skewing perceptions.

Investment strategies

Asset allocation in a world of riskier developed markets

Old distinctions between developed and emerging market bonds no longer hold true. At a time where true diversification matters more than ever, this has big ramifications for the way that portfolios should be constructed.

Investment strategies

Top 5 investment reads

As the July school holiday break nears, here are some investment classics to put onto your reading list. The books offer lessons in investment strategy, financial disasters, and mergers and acquisitions.

Sponsors

Alliances

© 2025 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.