Collectables and personal use assets are broadly defined as anything that would normally be purchased for personal enjoyment even if they were actually purchased to enhance the members’ retirement savings.

While all super funds are required to invest solely for the purpose of saving for retirement or protecting beneficiaries on a member’s death, this doesn’t mean they can’t invest in assets that might normally be bought for personal enjoyment. 

Some funds have substantial art collections, hold rare coins or even vintage cars. Because people normally buy these to enjoy them, they are classified as collectables.

Similarly, gold coins and jewellery are generally classified as collectables for SMSFs but gold bullion products are not. The reason is that people don’t usually buy gold bullion for fun, they buy it as an investment.

Importantly, regardless of whether or not a particular asset is classified as a collectable, when it is owned by an SMSF the decision to buy it has to be made purely because it will add to retirement savings.

For SMSFs that hold assets classified as “collectables” there are also special rules, additional documentation and insurance requirements that apply. For example, collectables owned by an SMSF cannot be:  

• leased to a related party
  
• stored at the residence of a related party 
• used by a related party generally a person
  

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Given all the extra rules it’s not surprising that many SMSFs no longer hold collectables. Those that do tend to do so because the trustees have particular expertise in the area and are more confident investing the members’ retirement savings in assets they know well.