Buying PM under SMSF - requirements to remain compliant with ATO

V

Voe

New Member
Hi all,

I'm new to SMSF and this forum so please be gentle;).

I intend to purchase from Perth Mint and I already have an account under my SMSF trust.

Please advise what do I need to do in order to remain compliant as per ATO requirements when acquiring PM.

Do I need insurance if I store the PM in a bank vault?
Do I need to modify my Trust Deed to explain my purpose for investing in PM?
Do I need to get an auditor and if yes at which point in time?
After I make a purchase is there anything else I'm required to do to remain compliant?

All suggestions and tips are appreciated.

Thanks in advance.
 
Just keep a good paper trail of all your purchases / sales. Make sure EVERYTHING is in the SMSF name so your accountant is happy.
 
Hi Voe and welcome,

Generally, no you do not need insurance regardless of where you store it, unless you want it of course. however if you buy coins, bullion or otherwise with a face value they are generally going to be
considered a collectors item, I believe all Perth Mint coins will fall into this category. This being the case you have to store them outside your private residence and they must be insured. I have some
coins I am now selling as I cannot get insurance (cannot comply with ATO requirement), although I was asked by insurance company if I wanted to insure the bank. :rolleyes:

You need to record how you intend on investing (investment strategy). This can easily be changed but must be recorded in a minutes of meeting and kept.

Keep all your receipts and records of your transactions.

I am with Esuperfund so they look after all the auditing and reporting requirements for me. When starting with them they do initial minutes and investment strategy for you.
Investment strategy is very open allowing you to make decisions based on the daily market and economical situation without having to change your strategy each time.

Hope this helps some. :)
 
Thanks for your reply

I have one more question..

When buying PM, apart from the trust name does the invoice have to include all the trustee names or just one trustee would be enough? For example the Perth Mint account is registered under our SMSF but only a one of the trustee in the acount profile.

Thanks.
 
Voe said:
When buying PM, apart from the trust name does the invoice have to include all the trustee names or just one trustee would be enough?
Click to expand...

Just the name of the trust is required.
 
If you don't have a corporate trustee but rather individual trustees you buy it in the names John & Mary Jones trustees for the John and Mary Jones superannuation fund or what ever the SMSF trust is called exactly.

If it is a corporate trustee name the company Acting Trustee for and the exact SMSF trust name is

Clear as mud:lol:

Kind Regards
non recourse
 
Today I called Perth Mint and was told that when issuing the invoice the will not be able to put both trustee names on it as their system doesn't allow for so many characters to be printed.

But ESUPERFUND says here http://www.esuperfund.com.au/shares/Metals/PhysicalMetals.aspx

Example 1:

If your SMSF has Individual Trustees (eg Barney Spot and Buffy Spot) and the SMSF Name is Spotty Superannuation Fund then the purchaser on the Purchase Contract will be:
Barney Spot and Buffy Spot as trustee for the Spotty Superannuation Fund.
All Trustees of the Fund must sign the Purchase Contract. Contract.

Now I don't know what to do. I'm afraid that this could create problems for me with ATO.
 
mmm....shiney! said:
Dirtbikepilot said:
This being the case you have to store them outside your private residence and they must be insured.
Click to expand...

You sure?
Click to expand...


Yes shiney that is how I read it.

The regulations require that:

collectables and personal use assets must not be leased to any related party of the funds
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 (other than a membership of a sporting or social club) 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.

Do I have to have a separate insurance policy for each collectable and personal use asset?

No. The rules require that collectable and personal use assets owned by an SMSF are insured as assets of that fund under an insurance policy taken out in the name of the fund. In this context, 'separately' means clearly identifiable as fund assets - that is, separately insured from other assets of the trustees. This means that these assets cannot be insured under a trustee's home and contents insurance. However, the collectable and personal use assets may be insured by the fund under separate policies or collectively under the one policy.

Remember that all collectable and personal use assets of the fund need to be insured in the name of the fund irrespective of their value.
 
Dirtbikepilot said:
mmm....shiney! said:
Dirtbikepilot said:
This being the case you have to store them outside your private residence and they must be insured.
Click to expand...

You sure?
Click to expand...


Yes shiney that is how I read it.

The regulations require that:

collectables and personal use assets must not be leased to any related party of the funds
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 (other than a membership of a sporting or social club) 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.

Do I have to have a separate insurance policy for each collectable and personal use asset?

No. The rules require that collectable and personal use assets owned by an SMSF are insured as assets of that fund under an insurance policy taken out in the name of the fund. In this context, 'separately' means clearly identifiable as fund assets - that is, separately insured from other assets of the trustees. This means that these assets cannot be insured under a trustee's home and contents insurance. However, the collectable and personal use assets may be insured by the fund under separate policies or collectively under the one policy.

Remember that all collectable and personal use assets of the fund need to be insured in the name of the fund irrespective of their value.
Click to expand...

Not according to Esuper.

They prefer that storage is with a third party and that you have insurance. If they are not stored by a third party or are not insured then you have to minute the reasons why.

C
 
Can anyone who has an Individual SMSF with ESUPERFUND and purchased PM from Perth Mint advise whether he managed to get the names of the trustees as per the example bellow from http://www.esuperfund.com.au/shares/Metals/PhysicalMetals.aspx

Example 1:

If your SMSF has Individual Trustees (eg Barney Spot and Buffy Spot) and the SMSF Name is Spotty Superannuation Fund then the purchaser on the Purchase Contract will be:
Barney Spot and Buffy Spot as trustee for the Spotty Superannuation Fund.
All Trustees of the Fund must sign the Purchase Contract. Contract.

Thanks.
 
Contrarian said:
Dirtbikepilot said:
mmm....shiney! said:
You sure?
Click to expand...


Yes shiney that is how I read it.

The regulations require that:

collectables and personal use assets must not be leased to any related party of the funds
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 (other than a membership of a sporting or social club) 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.

Do I have to have a separate insurance policy for each collectable and personal use asset?

No. The rules require that collectable and personal use assets owned by an SMSF are insured as assets of that fund under an insurance policy taken out in the name of the fund. In this context, 'separately' means clearly identifiable as fund assets - that is, separately insured from other assets of the trustees. This means that these assets cannot be insured under a trustee's home and contents insurance. However, the collectable and personal use assets may be insured by the fund under separate policies or collectively under the one policy.

Remember that all collectable and personal use assets of the fund need to be insured in the name of the fund irrespective of their value.
Click to expand...

Not according to Esuper.

They prefer that storage is with a third party and that you have insurance. If they are not stored by a third party or are not insured then you have to minute the reasons why.

C
Click to expand...

Contrarian you need to read the whole post. This is in relation to coins that are considered collectables by the ATO. Any bullion coin is going to be classed as a collectable due to it selling for more than spot price. They all do.
The above information I provided was cut and paste from the ATO web site. You will need to tell them they are wrong( good luck). Esuper or any other fund manager/auditor cannot override the ATO rules on such matters, do so at your own peril.
Not sure who you spoke to at esuper or how you worded your question, but when I spoke to them they were well aware of what was required by the rules for collectables (storage and insurance).
 
I think that the eSuper stance is based on the assumption that you are buying bullion bars and therefore the above regulations do not apply as they are only for collectable and personal use assets.

As for the perth mint invoice - my trustee name is too long as well for their records - not much you can do as it is a limitation of the perth mint's system. I would send through your question to eSuper and have them respond.
 
Dirtbikepilot said:
The above information I provided was cut and paste from the ATO web site. You will need to tell them they are wrong( good luck). Esuper or any other fund manager/auditor cannot override the ATO rules on such matters, do so at your own peril.
Not sure who you spoke to at esuper or how you worded your question, but when I spoke to them they were well aware of what was required by the rules for collectables (storage and insurance).
Click to expand...
It must be remembered that, in many cases, the ATO 'rules' are to satisfy their own bureaucratic procedures and bear little resemblance to the actual law ie not legal or binding.
 
boston said:
Dirtbikepilot said:
The above information I provided was cut and paste from the ATO web site. You will need to tell them they are wrong( good luck). Esuper or any other fund manager/auditor cannot override the ATO rules on such matters, do so at your own peril.
Not sure who you spoke to at esuper or how you worded your question, but when I spoke to them they were well aware of what was required by the rules for collectables (storage and insurance).
Click to expand...
It must be remembered that, in many cases, the ATO 'rules' are to satisfy their own bureaucratic procedures and bear little resemblance to the actual law ie not legal or binding.
Click to expand...
Interestingly, the law itself (regulation 13.18AA) simply refers to "coins, medallions and banknotes" as being collectables - it is in the interpretation documents that coins "trading above face value" are said to be treated as collectables ......
 
Dirtbikepilot said:
Contrarian said:
Dirtbikepilot said:
Yes shiney that is how I read it.

The regulations require that:

collectables and personal use assets must not be leased to any related party of the funds
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 (other than a membership of a sporting or social club) 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.

Do I have to have a separate insurance policy for each collectable and personal use asset?

No. The rules require that collectable and personal use assets owned by an SMSF are insured as assets of that fund under an insurance policy taken out in the name of the fund. In this context, 'separately' means clearly identifiable as fund assets - that is, separately insured from other assets of the trustees. This means that these assets cannot be insured under a trustee's home and contents insurance. However, the collectable and personal use assets may be insured by the fund under separate policies or collectively under the one policy.

Remember that all collectable and personal use assets of the fund need to be insured in the name of the fund irrespective of their value.
Click to expand...

Not according to Esuper.

They prefer that storage is with a third party and that you have insurance. If they are not stored by a third party or are not insured then you have to minute the reasons why.

C
Click to expand...

Contrarian you need to read the whole post. This is in relation to coins that are considered collectables by the ATO. Any bullion coin is going to be classed as a collectable due to it selling for more than spot price. They all do.
The above information I provided was cut and paste from the ATO web site. You will need to tell them they are wrong( good luck). Esuper or any other fund manager/auditor cannot override the ATO rules on such matters, do so at your own peril.
Not sure who you spoke to at esuper or how you worded your question, but when I spoke to them they were well aware of what was required by the rules for collectables (storage and insurance).
Click to expand...

My mistake.

I somehow missed the collectables bit.

C
 
This is a very complicated issue with meanings drawn from differnent acts. My personal feeling is that bullion coins are not collectibles. The fact that they trade above their face value is not the determining factor. From memory there is a section in the GST act (it may be a differnent act) that talks about whether the coin trades as "a function of spot" not above (or below) spot.

That is, when purchased it may have cost x + spot. As long as when it is sold you would get x + spot then the coin trades as a function of spot. The overall 'spirit' of the legislation is that they are trying to class numismatic coins as collictibles and have the collectible rules apply to those. IMO the intention of the legislation is not to catch bullion coins with a face value but rather numis stuff.

My argument would always be that when I sold the bullion coins (which I bought from the mint) back to the mint the price is always calculated as a function of spot, hence, the coins are bullion not collectible.

The safest option is to apply to the ATO for a private ruling - if you don't get the outcome you are after then you can go to court to test the legislation. If you still don't get the result you are after then I think there is a five year moritorium so you have time to sell up before you would be non-complying.
 
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