The ATO has begun working with insurance companies to assess artworks and collectibles owned by taxpayers and identify the owners of these kinds of assets.
There have been many instances where the tax office has identified ‘lifestyle assets’ that were not being properly accounted for. Since some assets may be subject to capital gains tax (CGT) on disposal, it is fundamental taxpayers are aware of properly accounting for their assets to avoid being hit with a CGT bill.
The ATO has advised taxpayers to be aware that:
– items purchased for more than $500 on or after September 20, 1985 are subject to CGT, even if they are kept for the personal use or enjoyment
– special CGT rules apply to items that form part of a deceased estate
– the date of an asset’s purchase or auction needs to be accounted for; not the asset’s settlement date
From July 1, 2016, the rules regarding any collectible and/or artwork owned by an SMSF include:
the collectibles cannot be stored at an SMSF trustee’s residence
an SMSF trustee or a related party is not permitted to lease or use any of the collectibles
the collectible must be insured by its own separate policy
the storage decisions by the trustees must be documented and minuted
if the collectible is to be sold to an SMSF trustee or related party, then a valuation by a qualified independent valuer may be required to determine the market value