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

16 ASX stocks to buy and hold forever, updated

This time last year, I highlighted 16 ASX stocks that investors could own indefinitely. One year on, I look at whether there should be any changes to the list of stocks as well as which companies are worth buying now. 

2025-26 super thresholds – key changes and implications

The ABS recently released figures which are used to determine key superannuation rates and thresholds that will apply from 1 July 2025. This outlines the rates and thresholds that are changing and those that aren’t.  

Is Gen X ready for retirement?

With the arrival of the new year, the first members of ‘Generation X’ turned 60, marking the start of the MTV generation’s collective journey towards retirement. Are Gen Xers and our retirement system ready for the transition?

Why the $5.4 trillion wealth transfer is a generational tragedy

The intergenerational wealth transfer, largely driven by a housing boom, exacerbates economic inequality, stifles productivity, and impedes social mobility. Solutions lie in addressing the housing problem, not taxing wealth.

The 2025 Australian Federal election – implications for investors

With an election due by 17 May, we are effectively in campaign mode with the Government announcing numerous spending promises since January and the Coalition often matching them. Here's what the election means for investors.

What Warren Buffett isn’t saying speaks volumes

Warren Buffett's annual shareholder letter has been fixture for avid investors for decades. In his latest letter, Buffett is reticent on many key topics, but his actions rather than words are sending clear signals to investors.

Latest Updates

World's largest asset manager wants to revolutionise your portfolio

Larry Fink is one of the smartest people in the finance industry. In his latest shareholder letter, the Blackrock CEO outlines his quest to become the biggest player in private assets and upend investor portfolios.

Economy

Australia's economic report card heading into the polls

Our economy grew by a nominal rate of 7% per annum from 2017 to 2024, but it benefited from the largesse of fiscal and monetary policies, both of which are now fading. We need a new, credible economic growth agenda.

Preference votes matter

If the recent polls are anything to go by, we are headed for a hung parliament at the upcoming federal election. So more than ever, Australians need to give serious consideration to their preference votes.

SMSF strategies

Meg on SMSFs: Tips for the last member standing

It’s common for people as they age to seek more help in running their SMSF if their capacity declines. An alternate director may be a great solution for someone just planning for short-term help in the meantime.

Wilson Asset Management on markets and its new income fund

In this interview, Matthew Haupt from Wilson Asset Management discusses his outloook for the ASX, sectors such as REITs that he likes, and his firm's launch of a new income-oriented listed investment company.  

Planning

‘Life expectancy’ – and why I don’t like the expression

Life expectancy isn't just a number - it's a concept that changes with survival rates over time. This article breaks down how age, survival, and societal factors shape our understanding of life expectancy, especially post-Covid. 

The shine is back on gold, and gold miners

Gold mining stocks outperformed in 2024 and are expected to do well in 2025. At this point in the rally, it's worth considering what has driven gold prices higher and why miners could still have some catching up to do.

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.