G'day Bricklayer, First question - are you a bricklayer? if yes, I grew up laying bricks, perhaps we can store gold under the house in the footing? ok stupid joke. When I use the term - ATO not a fan, generally when we talk SMSF we are governed by: - Trust Deed - Investment Strategy All of clients know, Redwood Advisory's investment strategy includes precious metals so we are all good. Any members that need a compliant investment strategy, i'll send you ours (email at [email protected]) In thinking the ATO would not be a fan. Everything comes down to SIS provisions or ATO rulings. Look at SMSF related party loans. Late last year the ATO said you can charge 0% interest interest rate on related party loans, then last month decided nah, you can't. Yep they changed their mind, leaving people who documented 0% interest rate loans during that time at risk. So back to the question, I cannot see a contravention of a SIS section to hold precious metals overseas. I would recommend a specific mention in the investment strategy - (an addendum perhaps) to state this (i.e overseas precious metals and your storage procedure). Then AUDIT, what I mentioned above, was that flat out, certain auditors would qualify as for all investments, Auditors need to obtain sufficient appropriate audit evidence on two key assertions: 1. Valuation 2. Existence Ok, valuation can be verified as long as its at arms length. In relation to existence, it comes down to the "commercial judgement" of the auditor. If the auditor is coservative and 100% of your investment is in precious metals stored in Iran (joke...), he may say stuff you, i'm going to Iran, pay for my trip (first class). Realistically this will depend on the documentation you have to support the investment in the relevant jurisdiction. The commercial judgement will depend on the materiality of the investment i.e if overseas PM is 15% of balance then more commercial judgement displayed that 100% of fund in PM overseas..... No matter what, you don't want to be the test case for the ATO and without researching I cannot think of a ruling that relates to PM overseas (apologies for not checking) however the principles I have documented above should apply to all investments. Non - Recourse - I don't think Auditors are useless - I spend hours upon hours with people have have messed up, through either been spruiked by some idiotic property spruiker or had some idiotic lawyer set up their Limited Recourse Borrrowing Arrangement correctly which will have massive ramifications in the future - not to mention PM stored in a personal residence. What bothers me is that we have ASIC registered auditors in India. Sorry, for each of these clowns, they have no idea what SIS is, and how they passed the test from ASIC to obtain a registration number I don't know. Maybe, have them audit an overseas PM storage? Ok long post but I hope that helps to understand thoughts of a auditor. BTW - for Redwood Advisory's Silverstacker clients, must of them come to us and ask us before they store PMs to ensure they are compliant. Remember when you send PM overseas, be sure to do your due diligence on the storage facility - how are you sure that you will not lose your asset over time, what if it stolen? what recourse do you have. Hope that helps and thank you to Elemental for his/her post. Cheers, Ivan
Hi Ivan, Thanks for your response. If I read you correctly, then: 1. There's no legislative (or ATO rulings, etc) restriction that we know of at the moment. 2. Storage of PMs in Australia is 100% fine as long as there's clear proof of existence. 3. Storage of same PMs outside of Australia, in same conditions, passing all of the other super tests, might only be a problem due to what sounds like it comes down to a personal judgement on the part of the auditor. Given that Banga's original post was about possibly storing in a vault in New Zealand, then I don't see any reason why not to at this point: taking photos or video evidence (even including that day's cover of The Australian in the background for proof of date, etc) would all be just as possible in NZ as in Australia, as would a live video phone call if needs be. Ditto for a Stat Dec signed by the Trustees, proof of purchase (in the name of the Trustees) from the bullion seller, and proof of vault ownership (in the name of the Trustees) from the vault ... once again, all of the other variables would be the same, except for the simple fact of what country it was in. Is it common for Auditors to want to inspect a vault holding personally? This is not something I'd heard of so far, but given that flight times and costs between Melb and Brisbane are not too different to NZ, then this would also be possible, if the Auditor really pushed for that. But, as you say, surely there are multiple other ways to prove existence, so with a reasonable auditor, surely this shouldn't be necessary.
Redwood; I wasn't implying that auditors were useless. The Cooper review found that the number of contraventions committed by SMSF's was infinitesimally small. The amount of work and expense that has been squandered for what result? The nonsense that qualified auditors had to go through to audit SMSF' s was ludicrous. As for investment advisors I have no trouble with going to an advisor for advice and paying heaps for that advice. My SMSF lawyer charges $400 an hour and I think that is cheap. What raises my hackles is stupid people going to advisers and checking their brain at the reception while they go in and consult with the messiah People who let advisers drive their investments deserve to be shaken down. To be a director of an SMSF you are now required to sign a document that outlines your duties as a director and that you understand the sole purpose test. Rather than playing nanny for the sake of saving a few morons hire a 1000 fake scam artists and have them pull a sting on trustees who are out there in ga-ga land. When they are sucked in ban them from being a trustee of an SMSF. When you consider an audit at $400 for 500,000 SMSF's a year for 40 years that is absolutely criminal. I got a reminder from my accountant the other day saying that if any of my SMSF bank accounts are overdrawn even for one day my fund will be non compliant. I wrote back and said I will comply until such a time that the ATO and the SIS act are brought from the 19th century into the 21st century with computers and direct debits. So much mindless compliance. Kind Regards non recourse
G'day Bricklayer, Re (1) - not that I am aware of. Re (2) Yes, existence for all types of investments i.e invest in property, existence is confirmed by title or go and visit the address Re (3) yes, comes down to judgement in the absence of any specific Tax Ruling (refer to 1 - I am not aware of any - none of our clients have o/s storage) Re auditors visits, nah, they should use 'commercial judgement', take your i phone, film the gold and email it to me....you should not and will not fork out auditor travel costs.....if this is requested find another auditor..... Cheers, Ivan
An auditor is not going to want to visit the vault in person IMO if the vault is well known and reputable - a statement from the vault/custodian should do. I think it is a bit funny to have Australian's talking about putting gold offshore when Perth Mint has 75% of its clients from overseas seeing us as a safe haven.
Ivan: Thanks for the confirmation, that helps a lot! Bron: Well, I guess there's: 1. Differences between Aust and other countries' laws. 2. The principle of diversification. 3. That some people may want to move to an o/s country ... while the control and management of their SMSF could remain in Aust, they may sleep better at night if their PMs were in the same country. Just some thoughts ...
