The requirement to have insurance cover on collectable and personal use assets acquired by a self-managed superannuation fund (SMSF) held in the fund's name has the potential to cause administration issues for trustees, according to the head of a professional body.
"I'm aware of some arrangements where people have had artwork held in a gallery and part of the arrangement has been that the gallery take out insurance on that particular piece of artwork," Institute of Chartered Accountants in Australia head of superannuation Liz Westover said.
"So to now have to have the insurance held directly in the SMSF's name is going to be problematic for those people," she added.
Other areas Westover identified as potentially causing SMSF trustees some difficulties are the new documentation requirements.
Under the proposed regulations SMSFs must hold a written record of the decision as to how to store the collectable or personal asset.
Furthermore, this must be retained for 10 years after the decision has been made.
In addition, trustees face a maximum penalty of $1100 for each contravention of the new rules.
"Also the strict liability for an offence of each of these regulations means in fact you could be fined $1100 for not documenting you decision on the storage of that asset which seems a little bit extreme," Westover said.
