SMSFs holding small amounts of gold bullion may find it hard to prove ownership of the asset, particularly if the fund has not chosen to store it in a secure facility, an SMSF technical expert has warned.
SuperConcepts SMSF technical and private wealth executive manager Graeme Colley said while section 62 of the Superannuation Industry (Supervision) (SIS) Act outlined the storage, valuation and ownership of artwork and collectibles, these become harder to prove with small quantities of precious metals.
“Proof of ownership is a challenge and can be difficult in some situations, such as bullion, to identify one gold ingot from another,” Colley said during a recent webinar.
“This is an issue particularly with smaller ingots of precious metals as they don’t have a unique identification compared with some larger ingots, which have numbers imprinted on them.
“The smaller the quantities of precious metals are, the less likely they are to have any clear identification as to which particular ingot the fund might hold.”
He said in conjunction with the small size of the holding, there was a need to securely store it in keeping with the requirements of the SIS Act and a failure to do so may raise red flags with an SMSF auditor.
“Some security arrangements are such that proof of ownership is reasonably easy to satisfy the auditor as to the ownership of the precious metal, but other cases will make that more difficult,” he said.
“Some deposit arrangements have controlled access to the safe where the bullion is kept for the trustees of the fund and provides an indication when they have accessed the secure area.
“However, when a person puts the asset in their home safe or another location without any true supervision of the access to the secure area, auditors tend to be more cynical about whether the asset is owned by the SMSF or just said to be owned by the fund.”
