As an expert in SMSF compliance and audit, we understand the challenges accountants and financial advisers face in helping trustee clients navigate the complex rules surrounding collectables and personal-use assets.
Especially as the end of the financial year approaches.
While these assets can provide valuable diversification, they also come with stringent ATO regulations that are frequently misunderstood or overlooked.
Collectables, including artwork, jewellery, classic cars, and memorabilia, are subject to strict rules around acquisition, storage, insurance, and use, all of which must be carefully documented and maintained.
Even unintentional breaches can result in non-compliance, audit red flags, and administrative penalties.
Drawing on our extensive experience supporting SMSF audits and compliance reviews, this article provides you with expert guidance, key considerations, and a practical EOFY checklist to help you guide your clients meet their obligations confidently.
It also explores several different case scenarios on how trustees might have failed to meet the ATO requirement and how you can help the clients to avoid falling into the same traps.
As we head into EOFY, it’s worth running a quick refresher with your SMSF clients on what actually qualifies as a collectable or personal-use asset under ATO rules.
Most advisers are knowledgeable with collectable as SMSF investments, but in our audit reviews, we still see confusion, especially when it comes to edge cases.
The Australian Taxation Office (ATO) defines collectables and personal-use assets broadly.
These include:
This is where collectables differ significantly from traditional investments.
There can be no personal use or access – not even occasional or incidental use – by members, their relatives, or any related party.
That includes storing a painting in a home office or driving a classic car “just once.” The ATO draws a firm line here, and so must we.
Also, just to clarify a point I still see causing confusion – cryptocurrency is not considered a collectable.
As EOFY approaches, it’s a good time to remind clients:
These aren’t just technical requirements.
They’re audit focal points.
Helping trustees stay on top of them protects the integrity of the fund and your advice.
An adviser we worked with had a client whose SMSF purchased a vintage boat as a collectable investment. The trustee, believing it was secure, stored the boat at their holiday home.
During the fund’s audit, this arrangement was flagged as a breach of SIS Regulation 13.18AA, which clearly prohibits storage of collectables at a related party’s private residence, regardless of intent or security.
We worked directly with the adviser to clarify the relevant compliance obligations, outline immediate corrective steps, and ensure the breach was addressed appropriately.
The asset was promptly relocated to a compliant commercial storage facility, and the decision was formally recorded in the trustee minutes. This proactive approach enabled the adviser to satisfy the auditor’s concerns and reduce the risk of further regulatory consequences
As EOFY approaches, auditors will scrutinise whether SMSF collectables meet the ATO’s strict compliance requirements. Advisers play a critical role in ensuring their clients’ documentation is accurate, up to date, and audit-ready.
Below are the key areas to review with your SMSF clients:
An adviser we supported had a client, John, whose SMSF held a collection of rare coins.
John valued the coins himself based on his extensive market knowledge.
The auditor questioned the figures, until John produced recent auction data and catalogue pricing.
Thanks to this well-documented evidence, the auditor accepted the valuation without issue.
Your role as adviser is essential: verify that your clients’ self-valuations (if any) are substantiated by independent data, and step in early to recommend professional valuations where needed.
Advisers should confirm that all collectables are insured in line with SIS Regulation 13.18AA:
Insurance not only safeguards the fund’s assets, but also ensures that any claims are paid directly to the SMSF.
Timing and documentation are critical.
Advisers should proactively check that clients arrange insurance immediately upon purchase and retain copies of the policy.
An adviser recently contacted us after their SMSF client, Monica, acquired a high-value artwork but didn’t organise insurance until more than two weeks later.
Although the artwork was eventually insured and Monica voluntarily disclosed the delay, the auditor flagged it as a reportable breach under SIS Regulation 13.18AA, which requires insurance to be in place within seven days of acquisition.
This is a good example of how even small timing oversights can create unnecessary compliance issues, especially with collectables, where the rules are black and white.
As advisers, it’s essential to remind clients upfront that insurance must be arranged immediately after acquisition.
A quick discussion at the time of purchase, or even before, can prevent a reportable event.
If you’re unsure whether a client’s insurance arrangements meet the timing requirement, we’re happy to review the details with you before the account go to audit.
The ATO requires SMSF collectables to be stored securely and never at a member’s private residence or that of a related party.
As an adviser, it’s important to confirm that your clients’ storage arrangements are fully compliant.
This documentation serves as evidence for auditors that the trustees have taken reasonable steps to safeguard fund assets. During pre-audit checks, prompt your clients to provide written records and photos of their storage setup.
This can save significant time during audit review.
At 30 June each year, advisers should verify that each collectable is still in the fund’s possession and properly recorded. Auditors will expect clear, date-stamped evidence of this.
Encourage your clients to prepare:
This verification is crucial to avoid misreporting, such as mistakenly listing an asset that has been sold, lost, or disposed of.
We assisted an adviser whose client’s SMSF listed a rare diamond as a collectable.
During the audit, there was no photograph, no record of storage, and no evidence the diamond still existed. Further investigation revealed the asset had been sold, but never removed from the fund’s accounts.
This led to a compliance breach and required corrective action.
This is a valuable reminder for advisers: regularly review the asset register with your clients.
Especially after any sale or disposal. Ensure that all records are accurate, up to date, and backed by appropriate documentation such as sale contracts or updated financial reports.
A simple post-sale follow-up can prevent costly and unnecessary audit issues. If there’s any uncertainty about how current documentation aligns with the asset register, we’re here to help review it with you.
To support you in guiding your SMSF clients and avoiding common compliance pitfalls, we’ve outlined the key documentation and checks you’ll want to review ahead of audit time:
Valuations:
Ensure trustees have obtained market valuations supported by objective, up-to-date evidence—such as recent auction results, price guides, or independent valuer reports.
Note: For any sale to a related party, an independent valuation is mandatory to satisfy ATO requirements.
Insurance:
Confirm that all collectables are insured in the SMSF’s name and that the policy was arranged within seven days of acquisition.
Delays may result in a reportable breach under SIS Regulation 13.18AA, even if corrected later.
Storage:
Verify that collectables are stored securely in commercial or third-party facilities, and not at a member’s or related party’s residence.
Ensure the storage decision is formally documented in trustee minutes or resolutions.
Documentation:
Check that trustees have maintained up-to-date records supporting their decisions, particularly for storage, insurance, and valuations.
Lack of documentation is a common audit trigger, even when compliance steps have technically been followed.
Existence and Holding:
Request clear, date-stamped evidence that the collectable is still held by the SMSF as at 30 June.
Acceptable evidence includes photos taken with a current newspaper, certificates of authenticity, serial numbers, inventory records, or purchase receipts.
Investment Strategy Alignment:
Confirm that each collectable aligns with the SMSF’s documented investment strategy and complies with the sole purpose test.
Auditors may request a copy of the strategy that specifically mentions collectables or similar alternative assets.
No Personal Use:
Ensure trustees understand and comply with the strict ATO rule that neither members nor related parties may use, access, or benefit from collectable assets – even incidentally.
Examples include hanging artwork in a private office or using a classic car for personal events.
If you’re managing clients with SMSF collectables and there’s uncertainty around compliance, storage, insurance, or documentation, now is the time to act, not at audit time.
SMSF Engine offers a dedicated review and audit service tailored to advisers and accountants working with collectable and personal-use assets. We provide clear guidance, technical analysis, and support through the ATO Early Engagement and Voluntary Disclosure process, where required.
Review our SMSF audit and compliance services
Arrange a pre-audit compliance consultation
Ensure your client files are complete, defensible, and aligned with ATO regulations well before EOFY deadlines.
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