Australian individuals own A$664m in art and collectibles as retirement investments. New rules governing those assets have caused some collectors to sell because they are now required to keep investment assets for retirement funds locked away:
The artwork can be displayed for sale or leased to an art gallery or a business, provided the leasing party is not related to the super fund (another set of rules defines related), and the agreement is an “arm’s length” one, meaning that it is for the going market rate for such assets.
If there is no leasing deal for the item then it must go into storage, and that will cost money.
In another tightening of the rules, the item must also be insured within seven days of purchase. It can no longer be covered by a home and contents policy. Each item must be named separately in a policy.
Tom Lowenstein, a Melbourne accountant who has campaigned against the new rules, says storage costs average 8 per cent of the asset per year. “It’s not worth keeping the asset if you are going to lose 8 per cent a year,” he says.
ATO Rules Force Art Sales (Australian Financial Review)
