Guardian Vaults Art Storage as an Investment
Within any investment portfolio, diversification is paramount. While a financial advisor or accountant may have previously only recommended the staples of property and shares, the advent of Self Managed Super Funds (SMSF) meant that alternative investments can provide a more personal approach to the funding of an individual’s retirement.
SMSFs are an extension of the provision for retirement income without government assistance – through the Aged Pension – that was introduced under the Compulsory Superannuation Contribution Scheme in the Hawke/Keating government. As the superannuation industry evolved the Howard/Costello government introduced a more flexible version with the introduction of SMSFs that would allow individuals to contribute at their own discretion under strict regulations.
A significant investment gaining popularity, outside the usually considered scope for an SMSF, is art. This can be through paintings, sculptures, drawings/sketches or photographs – art in its many forms provides a unique form of investment. It differs from other investments as it not only offers a potentially increased financial return, but it also identifies an individual’s preferred aesthetic. As such, it represents a perfect combination for investing.
It’s important to remember, however, that if art is procured as an investment towards an SMSF, there are specific governance requirements regarding security, storage, and insurance.
Primarily, valuable art has to be insured. This is a basic requirement – for the trustees of the fund and under statutory requirements, it is mandatory for any piece of art to be insured under the SMSF name. Upon purchase, insurance is required within 7 days.
Secondly, the location of the art is strongly regulated. It cannot be displayed, located or held on the premises of the beneficiary or a related party. It is required to meet the ‘sole purpose test’. For all intents and purposes, this means that the art needs to be stored off site, as it is solely for the funding of retirement.
It is incumbent upon the trustees of the SMSF to identify the location of where the valuable art will be safely and securely stored through the SMSF minutes. And while it may be tempting to have your art investment on show for appreciation in your home or office, if the art is stolen or damaged, the insurance will be void. The ATO will then most likely audit the SMSF, which can encounter significant penalties.
It makes sense to store your valuable art investments in a secure facility like Guardian Vaults. With a wide range of vaults and storage units, we have the expertise to ensure your artworks are stored safely.
As demand increases for valuable art storage, Guardian Vaults are providing substantial and specific needs of SMSF art investments. These include humidifiers for longer term preservation and art racks for suitable handling. And of course, insuring your valuable stored art is simpler and less expensive when it’s kept in a secure vault away from your home.
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