The partner of a top-tier accounting firm has reminded practitioners of the strict rules applying to personal-use assets, or collectables, held within an SMSF and any related-party transactions in which they may be involved.
The provisions regarding personal-use assets are stipulated in Superannuation Industry (Supervision) (SIS) Regulation 13.18AA.
“When you’ve got a related party involved, those assets can’t be used by or leased to a related party, they cannot be stored in the private residence of a related party and if you are selling [one of these assets] to a related party, an evaluation has to be performed by an independent qualified valuer,” Deloitte superannuation, SMSF and retirement savings partner Liz Westover told delegates at The Tax Institute National Superannuation Conference held in Melbourne recently.
Further, Westover warned the parameters established in the regulation are very narrow in their application.
“The restrictions on storing [a personal-use asset] in a private residence apply even if you’ve got purpose-built facilities. So if you’ve got wine, you can’t store it in a wine room [of a related party],” she noted.
Breaches of SIS Regulation 13.18AA each incur a punishment of 10 penalty units, with each unit now $313 in value since 1 July 2023.
Westover took the opportunity to point out an inconsistency regarding these assets between SIS Act section 62A and SIS Regulation 13.18AA as to the items considered to be personal-use assets.
To this end, both the legislation and regulations note items considered to be personal-use assets are artwork, jewellery, antiques, artefacts, coins or medallions, postage stamps or first-day covers, rare folios, manuscripts or books, memorabilia, wine, cars, recreational boats and sporting or social club memberships.
However, section 62A of the SIS Act also includes assets of a particular kind, if assets of that kind are used or kept mainly for personal use or enjoyment, with the exclusion of land.
“I always thought this difference was a bit strange,” Westover said.