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
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
