What is happening on 1 July 2016?

Essentially, collectable and personal-use assets which were acquired by a superannuation fund before 1 July 2011 (collectively called “Old Collectables”) must from 1 July 2016 comply with the following 5 rules:

• Rule 1 – a collectable cannot be leased to or used by a related party;
• Rule 2 – a collectable cannot be stored or displayed in a private residence of a related party;
• Rule 3 – the decisions of the trustee as to the storage of collectables must be documented (ie written down) and the written document kept;
• Rule 4 – each collectable must be insured in the name of the superannuation fund and the insurance must be effected within 7 days of 1 July 2016;
• Rule 5 – if a collectable is transferred to a related party (whether purchased or applied as an in specie benefit payment) then the value used for the transaction must be a value provided by a qualified independent valuer.

While these rules where introduced in July 2011, a five year transitional period was given before the rules applied to collectables which were acquired before July 2011.  This five year transitional period ends on 1 July 2016.

Can collectables still be acquired?

While collectables can still be acquired their acquisition must satisfy the SIS investment rules – in particular the rule that they cannot be acquired from a related party and once acquired the “5 Collectables” Rules must be satisfied.

Can collectables be acquired on a geared basis?

Yes – so long as the SIS asset acquisition rules are satisfied (ie cannot be acquired from a related party) and the gearing rules are satisfied (ie the collectable is an individual asset or forms part of collection).
In short any asset which could be acquired on an ungeared basis can be acquired on a geared basis (so long as the asset is a “single acquirable asset”).