SMSF Compliance | SMSF artwork | Artworks and other collectables in a SMSF | Restrictions in SMSF's

A SMSF can invest in artwork (artwork, collectables and personal use assets) to a maximum value of 5% of the total Fund value. You can't hang artwork in your house before retirement age. The artwork should be stored in a vault, away from sight or can be loaned to an art gallery. Another option is to display the artwork and having a market related rent paid to your SMSF for the use of the asset.

Artwork is seen as a collectable and when a SMSF invests in collectables the Trustees need to take care to make sure that SMSF members are not granted use of or access the assets of the SMSF in contravention of the sole purpose test. One of the most common breaches of the sole purpose test is investments that offer a pre-retirement benefit to members such as enjoying an artwork.

Stricter Rules for collectables and personal use assets

From 1 July 2011 there are more stringent rules for investment in artwork and collectables. These tightened rules state:

   * the artwork must not be leased  or used by a related person;

   * the artwork must not be stored in your private residence;

   * the decision on the storage of the item must be recorded in the SMSF minutes; and

   * if the artwork is sold to a related party it must be independently valued.

The conclusion is therefore that a SMSF can invest in artwork, but if you want to enjoy it, rather buy it in a personal capacity.