Artwork investment?

I wondered if any of the resident accounting experts might be able to assist, given my accountant is unavailable for an urgent question on Xmas eve.

I am overseas and we just looked at a great artwork by a renowned artist in a gallery at our hotel and I would like to purchase it under a company (instead of personal name) and shipped it over to Aus.

Question is if it hangs in our house vs the company's office with the prime purpose as an asset purchased for investment, would that potentially compromise its status as a business asset/ investment with ATO? I wouldn't want to pay the extra tax that would be due if buying in my personal name.

Appreciate any feedback.

 

It's the company's asset, not yours. The company pays company tax not CGT.

You pay CGT on the profit and get a discount on the tax rate.

You are a separate entity to the property.

 

Thanks mate - appreciate your response & merry xmas!

I understand the distinction b/w company vs personal assets/ tax etc - my question was more around the premise that if a company's asset resides (hangs) in a home, is it going to be potentially an issue with ato. In other words, I can't have my company buy my PPoR without tax/ compliance implications so in similar vain, could a company's asset stay in a private home without triggering Div7A.
Thanks

 

Wake that accountant up, this is urgent!

Division 7A - the company assets being used by an associate.

Why not consider a discretionary trust?

 

yes it will be subject to Division 7a

Private use of assets

 

Cheers both! Appreciate your feedback.

The accountant is also overseas and I doubt she would be checking her emails on xmas day.
I would leave it in the gallery then!! Def not up for div 7As compounding...

Wishing you all a great Christmas.

 

Why does the company need to own it ?

 

Buying it in your own name is a problem why?

 

The paintings look amazing and the Canadian artist has painted similar pieces for Federer, Lady Gaga, Shania Twain and her pieces hang in UN headquarters. Not much of an art follower but we couldn't get our eyes off that beautiful piece and I suspect it will make for a great investment long term.

Div 7A

 

Sorry i mean why do you have to purchase the painting in the name of the company

If you want to could purchase in your partners name if asset protection is a concern or gift it to a trust or if you have an investment trust use that

 

As in buy it with personal money in your own name?

 

I wouldn't want to trigger further Div 7As, which will be the case, should I purchase in my personal or her name. Essentially, we would be drawing the funds down from one of our company's accounts to buy.

We have various trusts and the accountant is aware of which trust/s might be the right vehicle given our group structure so without her advice, I just wouldn't feel comfortable choosing a trust to own it.

I don't want to purchase it with my after tax dollars and given the size of purchase, the amount could only come out of one of my entities that I own, holding cash. As soon as the funds leave the company (outside of inter-company loans), then it will trigger Div 7A.

 

Fair call.

 

Is a loan from the company an option?

 

Surely a new trust would be the way to go. If no income no tax return needed.

 

Considering its capital and not a deductible expense, how can you buy it with pretax dollars even if you bought in the name of a company?

Do any of the companies have loans payable to you?

 

Yes, but then the interest would be income to the company but not deductible to the owner - unless it is somehow income producing

 

That's what triggers Div 7A and I am up to my eyeballs with those currently. A company to company loan works but the OP was around the viability of using a company asset for personal use which given the link posted above makes it quite a grey area and I have zero appetite for anything with shades of grey when it comes to ATO...

 

Would they take a cash holding deposit until you have spoken to the accountant? Refund it when you stump up with a cheque.

 

That creates division 7a issues