The draft regulations concerning the investment in artworks and collectables by self-managed superannuation funds (SMSFs) handed down recently still need better clarity in certain areas, according to OnePath technical services manager Graeme Colley.
Under the proposed regulations, if an SMSF has an investment in a piece of artwork or a collectible it cannot store it in a 'private residence' of a related party.
However, Colley said it is not entirely clear what this means.
"We don't know what the term 'private residence' means. For CGT (capital gains tax) purposes you've got a definition of main residence and main residence is an area used for domestic purposes up to two hectares," he explained.
"So is that the same as this thing called 'private residence'?" Colley asked.
Furthermore, he feels if the 'private residence' definition in the draft rules fell into line with the CGT definition it would still be confusing as to how much of the residence would be relevant.
"Is that just the building or the whole two hectares around it? If that only refers to a residence, the house where people live for example, is there an issue around that?" Colley said.
According to Colley some SMSF trustees who invest in collectable cars have specially made sheds to avoid rust and the current definition does not make it clear if this type of structure would be included.
