Early Release of Benefits
It is possible for benefits to be released from superannuation, prior to retirement, on compassionate grounds. Compassionate grounds include medical treatment for chronic or life-threatening illnesses, funeral expenses and preventing foreclosure of a member’s home mortgage.
Up until 1 November 2011, applications for approval of release of benefits on compassionate grounds were made to the Australian Prudential Regulation Authority (APRA). However, from 1 November 2011, the processing of applications for approval of release of benefits on compassionate grounds has moved to the Department of Human Services.
Collectibles within your SMSF
SMSF trustees should be aware that the rules on holding collectibles have changed. On 1 July 2011 rules were introduced into the Superannuation Industry (Supervision) Act 1993 (SIS Act) for SMSF investments in collectables and personal use assets. These rules took effect on 1 July 2011. They apply to all collectable and personal use asset investments made by SMSFs on or after that date.
For assets that were acquired before 1 July 2011, trustees have until 1 July 2016 to comply with the new rules.
The regulations require that:
- collectables and personal use assets must not be leased to any related party of the fund
- collectables and personal use assets must not be stored or displayed in the private residence of any related party of the fund
- trustees must make a written record of the reasons for the decisions on where to store the collectables and personal use assets and keep the record for 10 years
- trustees must ensure that collectables and personal use assets are insured in the name of the fund within seven days of acquisition
- collectables and personal use assets cannot be used by any related party of the fund
- the transfer of ownership of collectables and personal use assets to a related party of the self-managed super fund must be done at a market price determined by a qualified independent valuer.
As trustee of his SMSF, Ian decides he would like to purchase a World War I antique motorcycle as he believes it would be a good investment for his fund. He makes his purchase on 1 February 2012. As purchase took place after 1 July 2011, the new regulations apply.
Ian would be unable to store the motorcycle at his home. Nor would he be able to keep it at his brother’s home as his brother is a related party. He could store the motorcycle at his brother’s business premises, but he could not display it there. If he wanted to display the item, he could lease it to a museum. Ian will also need to record the reasons for his storage decision, and retain these minutes for a period of 10 years.
As trustee, Ian would have to make sure that the motorcycle is insured within 7 days of its acquisition, and the insurance policy must be in the name of the fund.
It is important to note that the “no private use” and other investment rules still apply, in addition to the new collectible rules. Ian would be prohibited from taking the motorcycle for a spin to blow off the cobwebs!
For further information regarding these new rules please refer to the ATO website at http://www.ato.gov.au/superfunds/PrintFriendly.aspx?ms=superfunds&doc=/content/00301181.htm
or feel free to call Bill at DIY Super with any questions, ph: 3275 7422 or email@example.com.
Author: Donna (DIY Super)