Drawbacks of Investing Cars Inside Your SMSF

When establishing an SMSF, investors have the option to invest in collectibles. 

The ATO has established a long list of collectibles to educate SMSF members on what can be invested inside an SMSF. 

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The ATO Definition of Collectibles 

Currently, the ATO identifies the following as a collectible: 

• Paintings
• Sculptures
• Drawings
• Engravings
• Photographs
• Jewellery
• Antiques
• Artefacts
• Coins, medallions or bank notes
• Postage stamps or first-day covers
• Rare folios, manuscripts or books
• Memorabilia
• Wine or spirits
• Motor vehicles and motorcycles
• Recreational boats

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A New Player In Town

One collectible has stood out and according to, SMSF Alliance, a leader in the SMSF space, motor vehicles have seen an increase in investments inside an SMSF. 

It must however be remembered that regardless of the collectable, the SMSF has to ensure that certain rules around ownership, storage and insurance are being met.

If these rules are ignored, the SMSF and its members could face substantial fines and other penalties.

Specifically for a collectable asset such as a motor vehicle, motorcycle or recreational boat, it must also be noted that the collectable must not be used by members or related parties.

Collectable investments are also long-term investments and any value placed on the collectable is based on how valuable society deems the collectable.

Therefore, the collectable does not provide any form of income until it is sold.

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Conclusion

For those looking for an investment that offers high-yield returns inside of an SMSF, have you considered SMSF property investment?

Get in touch with our team today to begin your SMSF property investment journey with Supavest! 

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