Since the creation of Self Managed Super Funds (SMSF) they have become the largest segment of the superannuation industry, valued at over $1.5trillion. People have chosen to manage their retirement funds in a more proactive way through SMSFs rather than simply contributing to a large super fund that provides modest returns and charges performance fees. SMSFs are intended to allow a diversity of discretionary investments for the investor, adopting a higher risk profile with the intent of ensuring maximum returns.
Investors who choose to operate an SMSF mainly invest in staple asset classes such as property, shares and cash through term deposits. When it comes to protecting those investments there is a well-founded system to ensure their risk is limited to the returns, not to the asset itself. Investment properties are validated by the title on which they are held and insured through an insurance company. Share portfolios are maintained and secured by your broker or through your bank trading account and term deposits are assured by Australia’s robust banking system.
But when it comes to securely storing other SMSF investments such as gold and silver bullion, art, antiques, jewelry and other collectibles, there are challenges to ensure they are safe and compliant with the statutory requirements of the ATO.
Investing in these items through an SMSF must be done for legitimate retirement purposes and not provide any personal or present day benefit. They must comply with all relevant investment restrictions, including the sole purpose test which means the funds must be maintained to provide retirement benefits to the members. Your fund fails the sole purpose test if it provides pre-retirement benefits to someone, such as personal use of a fund asset. They cannot be displayed or used in a private residence or by related parties or in a business office. Neither can they be leased to a related party.
The decision as to where these items are stored must be documented and recorded through the minutes of the meeting of trustees and a written record kept. Any item purchased through the SMSF must be insured in the fund’s name within seven days of acquisition and valuations must be determined. Given the statutory requirements and challenges of safely and securely storing these investments, it can be a daunting and complex proposition. Guardian Vaults provides an essential role in ensuring that you can purchase these items as investments through an SMSF with the knowledge you are meeting the necessary obligations as set out by the ATO.
Guardian Vaults offers secure and safe storage, insurance and access to auditing services that allows you to annually report your SMSF with ease and simplicity. Through Guardian Gold, your SMSF can also easily purchase physical gold and silver through their online investment platform and seamlessly transfer it to Guardian Vaults to store in your safe deposit box or bullion safe. With Guardian Vaults, you have the confidence that all of the compliance requirements are thoroughly satisfied.
For more information regarding the safe storage of your SMSF investments, click here.
Guardian Vaults are not financial advisors or accountants and as such you should seek professional advice regarding your obligations.
