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ATO Interpretative Decision

ATO ID 2004/250 (Withdrawn)

Superannuation

Investment in art by a Self Managed Superannuation Fund (SMSF) - in-house asset.
FOI status: may be released
  • This ATO ID is withdrawn as it is superseded by SMSFR 2008/2
    This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

Issue

Does the display of a work of art, owned by an SMSF, in the member's residence give rise to an in-house asset?

Decision

Yes, the display of a work of art, owned by an SMSF, in the member's residence gives rise to an in-house asset.

Facts

An SMSF invests in works of art.

Some of the works of art are displayed in the residence of the members of the fund.

Reasons for Decision

Subsection 71(1) of the Superannuation Industry (Supervision) Act 1993 (SISA) defines an in-house asset as 'an asset that is a loan to, or an investment in, a related party of the fund, an investment in a related trust of the fund, or an asset of the fund subject to a lease or a lease arrangement between the trustee of the fund and a related party of the fund'. A related party of the fund includes its members, its trustees and partners in a partnership where a member of the fund or a fund trustee is also a partner.

Subsection 10(1) of the SISA defines a lease arrangement as 'any agreement, or arrangement or understanding in the nature of a lease (other than a lease) between the trustee of the fund and another person under which the other person is to use, or control the use of, property owned by the fund, whether or not the agreement, arrangement or understanding is enforceable, or intended to be enforceable, by legal proceedings'. Australian Prudential Regulation Authority Superannuation (APRA) Circular No. II.D.6 also discusses the meaning of lease arrangement. The Circular notes at paragraph 21 that 'The concept encompasses informal arrangements that lack formal evidentiary documentation'. In the arrangement described it is considered that a lease arrangement would exist.

Accordingly, an asset, which is owned by an SMSF and utilised by a member, is an in-house asset of the SMSF.

Date of decision:  27 October 2003

Year of income:  Year ended 30 June 2003

Legislative References:
Superannuation Industry (Supervision) Act 1993
   subsection 10(1)
   subsection 71(1)

Related ATO Interpretative Decisions
ATO ID 2004/248
ATO ID 2004/249
ATO ID 2004/251

Other References:
APRA Superannuation Circular No.II.D.6

Keywords
Self managed superannuation funds
SMSF investments
Superannuation fund in house assets
SMSF related parties

Business Line:  Superannuation

Date of publication:  26 March 2004

ISSN: 1445-2782

history
  Date: Version:
  27 October 2003 Original statement
You are here 18 July 2008 Archived

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