Money Australia — May 2017

C

ollectables or

personal-use

assets such as

artwork, antiques,

rare coins and

vintage wine can be very lucrative

investments. If you are considering

investing in collectables via your self-

managed super fund there are rules

that you need be aware of.

Primarily, the investment must

satisfy the “sole purpose test”.

The sole purpose of a super fund

is essentially to provide retirement

benefits for its members, rather

than a benefit now. Furthermore,

the investment must fit within the

fund’s investment strategy, which

must reflect the fund’s purpose and

circumstances and take into account

risk, diversification and liquidity.

An investment in a painting by

afamousartistmaybegreatin

the long-term but will it be able to

provide for the member’s retirement

if it was the fund’s only investment?

Are there ready markets available

to sell the painting if a member is to

be paid a pension or lump sum out

of the fund? Perhaps more relevant

is the question, “Are the members

receiving a benefit from the painting

now or is it truly purchased to

provide for their retirement?”

Other super fund investment rules

relating specifically to collectable

and personal-use assets are that

these assets cannot be leased to a

related party, used by a related party

or stored or displayed in a private

residence of a related party. Also

the collectable must be individually

insured in the fund’s name within

seven days of purchase and if it is

transferred to a related party it must

be at market price as determined by

a qualified, independent valuer.

Hence an investment in a

collectable in your SMSF may be

financially rewarding but it can also

be onerous and problematic.

IRON ORE’S ROUGH R

Source: Bloomberg

$

$

$

$

$

$

$

$

$

2.5%

2.0%

1.5%

1.0%

0.5%

0%

-0.5%

-1.00%

Dec08 Dec09Dec10 Dec12Dec11 Dec13 Dec14Dec15Dec

Iron ore price

($US/tonne, LHS)

China’s mon

supply (M1)

growth (RH

RIDE

I i

ney

)

S)

IN BRIEF

TOP 5 BALANCED

SUPER FUNDS,

BY 3-YEAR

PERFORMANCE

Hostplus8.83%pa

3-year return;MTAA

Super8.68%pa

3-year return;Cbus

8.46%pa 3-year

return;CareSuper,

8.42%pa 3-year return;

AustralianSuper,

8.3%pa, 3-year return.

Source: SuperRatings as

at 28-Feb-17.

INVESTING

Andrew Yee, director of superannuation, HLB Mann Judd

XMORE

INVESTING

STORIES ON

P70-

COMPILED BY STEPH NASH

T

hankstoChina’scontinuedinterestinourexportmarket,

Australian commodity prices have risen higher in the first half

of 2017. If the gain were to last, Nikko Asset Management says it could

lead to a rise in inflation and continued improvement of nominal GDP.

Thisinturncouldleadtoaninterestraterise,withNikkopredicting

the Reserve Bank will increase or hold rates in a “strong nominal

GDP environment”.

Much of the success of our commodities sector relies on China.

There has recently been an expansion of money in the country’s

economy, which has helped support prices, although at the time of

writing iron ore was dropping. As this fiscal expansion slows, the gains

in Australian commodity prices could also begin to slow, with Nikko

suggesting this could potentially end the 12-month long rally. Despite

this,Nikkopredictstheoutlookforthenexttwoquarterstobestrong.

A

n alternative way to invest has

finally been legalised in Australia.

The Corporations Amendment (Crowd-

Sourced Funding) Bill (2016) has

passed through the senate, meaning

that investors can now participate in

equity crowdfunding.

Until recently, crowdfunding only

allowed them to receive a product or

service in exchange for a contribution. But

they can now legally participate in capital

raisings and in return receive a share of

the company. There’s a maximum of

$10,000 per eligible company, which

can be invested through a crowdfunding

platform with a financial licence. There’s

a five-day cooling-off period in case you

change your mind.

Companies must produce a disclosure

document when they raise capital

through crowd-sourced funding, so be

sure to read up on the investment risks

before participating. The law applies to

unlisted public companies that are limited

by shares with less than $25 million in

gross assets and annual revenue.

Commodities look strong Equity crowd-

funding gets

the green light

SUPER ASSETS

Collectables

must pass all the tests