The idea of art as an investment raises a lot of hackles in Europe and North America. And comments on the art fund industry have shown there’s not great demand for passive art investing. But in Australia, using art to goose the returns on a self-managed retirement account has been an accepted idea for some time. That is, until a few years ago when a government report suggested that art for these superannuation accounts be held in storage or divested to be properly treated as assets.

Now that the rules are coming to pass, Australian art investors face a choice, sell into a market with reduced demand or stockpile for a long-term investment:

Mr Fox said there was a ”super art stockpile” of at least 50,000 artworks, with an estimated value of $250 million, that may be sold off in the next two years. He said there had been a significant amount of divestment of pre-existing collections, with 30 per cent sold or written off in the 2011-12 financial year.

”That could be explained by a desire to seek a higher price for the artworks and collectables before the market becomes depressed by an oversupply of artworks,” he said. ”In other words, first out, best dressed.”

The value of art and collectables held in SMSFs in March 2014 was $589 million, according to the Australian Taxation Office – far below the peak of $731 million in 2012. It has been estimated by accountancy experts that investors would need to spend up to 8 per cent of the value of their collection each year to comply with the new rules, according to art consultant Jane Raffan.

”This is a major incentive to divest, as it nullifies any likely capital gain,” she said.

New superannuation rules spark fears of art fire sale (Sydney Morning Herald)