Fresh analysis reveals the most exotic SMSF investments

Fresh analysis reveals the most exotic SMSF investments

Commercial lasers, ATMs and an $18,000 sewing machine are amongst some of the quirkiest investments made by SMSFs, according to a major SMSF administrator.

Data analysis conducted by SMSF services provider SuperConcepts across 2,450 SMSFs has indicated that some trustees have a strong appetite for investments that are outside of the ordinary. SuperConcepts has picked out the top 10 investments it deems the most bizarre.

 

SMSFs can lease some assets they own as an investment. A good example can be property such as a shop or warehouse. So why not other assets ? Its often ignored. For example what about a shop fitout ? Or a machine / forklift etc ? A car ? A truck ?

Its often complex and cant be seen or implemented to give financial assistance to a related party :
Legal Database
and why legal advice and legal services to implement it are needed.

The most simple issue is that of an inhouse asset and the 5% limit must be met as well as arms length terms. A leased factory held in a unit trust may escape that 5% limit by virtue of SISReg 13.22C and D which refers to leased business real property. (Refer to s66(5) SISA)
https://www.ato.gov.au/misc/downloads/pdf/qc42798.pdf

 

I spoke to a friend last week who said there brother had just bought an XB Falcon Coupe (Aussie muscle car for those not in the know) in the SMSF. Keeps it in his driveway and takes if for a drive once a month.Good luck with that investment. This is the reason we cant have nice things

 

Thats a breach.

Personal use asset rules prevent these being leased to, stored for display in residence of a or used (driven ?) by a related party. (Part 8 Associates is quite broad in definition). The attached article provides detailed guidance for vintage vehicles as a guide.

Collectables and personal use assets

A car stored elsewhere such as a museum provided it is insured etc may be OK. And driven by a mate. Not a relative.

 

Thanks Paul. I provided the same information but i dont think it will ever be given to him. Just a classic example of why the ATO has concerns about SMSF. It really isnt that hard to check this information or make a quick call to the accountant prior to purchasing a significant asset in the fund.

 

All it takes is the audit. Or reporting collectable assets in the annual return makes it a review risk. Then it hits the fan when the ATO elevates its review risk and asks questions. Next thing its non-compliance, penalties and agreement to wind up the fund. Selling the asset. And thats probably at best.

In many of these cases its common for sloppy lodgement compliance to trigger a review. The head in the sand approach.

How we deal with non-compliance

 

"Old cars" are a popular investment however, like a "holiday home" you have to be very careful not to breach the sole purpose test.....not worth the risk for a small investment. I used to own a XB and an XD - oh the days of no power steering and wind down windows!

Cheers Ivan