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

Australia's retirement system works brilliantly for some - but not all

The superannuation system has succeeded brilliantly at what it was designed to do: accumulate wealth during working lives. The next challenge is meeting members’ diverse needs in retirement. 

Australian stocks will crush housing over the next decade, 2025 edition

Two years ago, I wrote an article suggesting that the odds favoured ASX shares easily outperforming residential property over the next decade. Here’s an update on where things stand today.

The 3 biggest residential property myths

I am a professional real estate investor who hears a lot of opinions rather than facts from so-called experts on the topic of property. Here are the largest myths when it comes to Australia’s biggest asset class.

AFIC on the speculative ASX boom, opportunities, and LIC discounts

In an interview with Firstlinks, CEO Mark Freeman discusses how speculative ASX stocks have crushed blue chips this year, companies he likes now, and why he’s confident AFIC’s NTA discount will close.

Where to hide in the ‘everything bubble’

It might not be quite an ‘everything bubble’ but there’s froth in many assets, not just US stocks, right now. It might be time to stress test your portfolio and consider assets that could offer you shelter if trouble is coming.

Property versus shares - a practical guide for investors

I’ve been comparing property and shares for decades and while both have their place, the differences are stark. When tax, costs, and liquidity are weighed, property looks less compelling than its reputation suggests.

Latest Updates

Economy

Get set for a bumpy 2026

At this time last year, I forecast that 2025 would likely be a positive year given strong economic prospects and disinflation. The outlook for this year is less clear cut and here is what investors should do.

Investment strategies

History says US market outperformance versus Australia will turn

Much has been made of how US markets, especially the NASDAQ, have significantly outperformed the ASX over the past two decades. History suggests the pendulum will swing back once again in Australia's favour.

Investment strategies

Announcing the X-Factor for 2025

What is the X-Factor - the largely unexpected influence that wasn’t thought about when the year began but came from left field to have powerful effects on investment returns - for 2025? It's time to select the winner.

Economy

The illusion of progress

What is progress? Is it GDP growth? Increasing wealth? New and improving technology? This argues that our measure of progress has become warped, and we're heading backwards rather than forwards.

Strategy

Our favourite summer reads

Summer is a great time to catch up on a good book. Here is a list of books on leadership, investing, and well-being for those looking to learn, reflect, and gain inspiration over the holiday season.

Sponsors

Alliances

© 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.