To properly assess artworks and collectibles owned by taxpayers, the ATO says it is working with insurance companies to identify the owners of these sorts of assets. Artworks and collectibles may not be correctly accounted for, says ATO
The ATO says it has identified instances where “lifestyle assets” are not being properly accounted for. It says taxpayers need to be aware they may be subject to CGT on disposal.
The ATO has told tax professionals it is important their clients are aware that:
- items purchased for more than $500 on or after September 20, 1985, are subject to CGT, even if they are kept mainly for the personal use or enjoyment of the client, and
- that special CGT rules apply to items that form part of a deceased estate, then…
This is especially important given the changes looming for the SMSF landscape from July 1. The way in which collectible investment assets are dealt with when held by an SMSF will be required to adhere to a new set of rules.
From July 1, 2016, the rules regarding any collectible/artwork owned by an SMSF include:
- the collectibles are not to be stored at the 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 must be sought to determine the market value.
Given the latest data matching exercise being undertaken by the ATO regarding insurance policies on lifestyle assets, the above point regarding separate insurance policies is especially important. This also ties in with the efforts by the ATO to ensure CGT liabilities are factored into tax outcomes.
Also, from the same date, the exemption that applies to accountants giving advice on the establishment or winding up of an SMSF will cease. After July 1, accountants dealing with SMSF trustees will be required to be appropriately licensed.
A recent Taxpayers Australia webinar was held that covered all the aspects of this important development. Members can access a recording of the webinar and a copy of the chat transcript here.