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Campbell McCart

May 23, 2021

Closing Fund Sale of Artwork to Member

in SMSF Technical Forum

Background

Fund has 2 members. Assets consist of Shares, Cash, Gold and Jewellery.

They want to close the fund as at 31 May 2021. On the basis that they get independent third party valuations on the gold and the jewellery, is the fund allowed to sell the gold and jewellery to the members?

Regarding the shares, I am not aware of any industry funds that allow shares to be rolled over into it. My understanding is that shares, gold, jewellery need to converted into cash and these proceeds are then rolled into the industry fund. Opinions please especially the sale of gold and jewellery.

1 comment

Comments (1)

THE AUDITORS INSTITUTE

May 24, 2021

Hi Campbell

Re collectables (and personal use assets) they are defined at Section 62A to include "jewellery" and "coins" and other investments such as artwork, wine, etc.

Regulation 13.18AA(7) states that a Fund commits an offence if a collectable (or personal use asset) is sold to a related party and the "realisation was not at a market price determined by a qualified independent valuer".

Based on the SIS regulations yes the jewellery can be sold to a related party only if a market price is determined by a qualified independent valuer. In relation to the gold it will only require a valuation to determine a market price if it is determined to be a collectable or personal use asset. Normally gold / silver is not considered a collectable if its value is determined by a spot price.

I am not aware of any Industry Funds that accept a rollover other than in cash.

Regards

SMSF AAA