CLASSIC CARS IN YOUR SMSF

 

During the COVID period, a popular SMSF strategy was to find a new expensive hobby and make your childhood dream and buy a classic car in your SMSF. A classic or collectable vehicle is classified by the ATO as a ‘collectable or personal use asset’. These also include precious metals, boats, wine and jewellery. Recent guidance on collectibles by the ATO can be found here.

Before you decide to invest in a classic car – it’s important to firstly consult with your wife and then consult with Ivan and Redwood who specialise in classic cars – as we own many !

There are restrictions on investing in a classic car through your SMSF and investment in such items must be made for genuine retirement purposes, that is, not to provide any present-day benefit, meaning:

• You cannot drive the classic car daily like your family car, it cannot be used by a member or a related party
• The vehicle cannot be stored in your private residence – we interpret this to mean your principle place of residence. It can be stored at a investment property you own including a factory or warehouse
• The vehicle cannot be leased to, or part of a lease agreement with, a related party
• The vehicle must be insured as soon as it is purchased (within seven days), many use Shannon’s insurance for classic cars (not a personal recommendation)
• Your investment must comply with all other relevant investment restrictions, including the sole purpose test
• The decision on where the item is stored must be documented (for example, in the minutes of a meeting of trustees) and the written record kept
• The fund must be registered in the SMSF fund name – note, certain motor vehicle clubs will not allow a “trust” to be a member of the club, in this case you may need to register the vehicle in your personal name and a declaration of trust is required to prove ownership of the vehicle for compliance purposes
• If the item is transferred to a related party, this must be at market price as determined by a qualified, independent valuer.

 

Thinking of investing in a classic car in your SMSF, Redwood are here to answer your questions.

 

Disclaimer – The content has been prepared by Redwood Advisory Pty Ltd without taking account of the objectives, financial situation or needs of a particular individual and does not constitute financial product advice. This article should not be considered personal financial advice as it is intended to provide factual information only.