Motor vehicles as Self-Managed Superannuation Fund assets
I was recently asked by one of my clients if they could purchase a car in their Self-Managed Superannuation Fund (SMSF). Trustees of SMSF’s are aware whilst the ATO does not prohibit a SMSF investing in collectables and artwork, they may be less sure of the rules concerning cars and motorcycles.
Consequently, I thought that it would be a good topic to elaborate on in this newsletter, in particular, trustees may have questions relating to the use and maintenance of motor vehicles and whether this breaks the rules governing personal use assets.
These may include:
Storage of the motor vehicle
Superannuation law prohibits motor vehicles from being stored in the ‘private residence’ of a member of a SMSF or of any related party of the fund. This includes areas such as the garage of a private home or other area that is considered a private dwelling.
However, there is an exception to this rule. According to the ATO, motor vehicles, as well as other personal use assets, are allowed to be stored in business premises owned by a related party of the fund. This does not extend to private residences, but rather business areas such as a purpose built storage facility, car park or garage that is part of a business.
Taking out a motor vehicle for a maintenance drive
Under current super legislation, the ATO maintains that a trustee cannot “drive the vehicle for any reason, including taking it for a maintenance drive.”
The regulations also extend to prohibiting restoration work to take place on the motor vehicle. However, the law does not prevent a person who is not a member of the SMSF or a related party to drive the vehicle for maintenance purposes.
Therefore to get it serviced, you can’t take it to your mechanic, they have to come to you!
Other restrictions for personal use assets may extend to motor vehicles as well:
- Collectibles such as motorcycles and cars must not be leased to any related party.
- SMSF trustees must ensure that the vehicle is insured in the name of the fund within 7 days of acquisition.
- Trustees wishing to transfer ownership of personal use assets to a related party of the SMSF must do so at a market price as evaluated by a qualified independent valuer.
- SMSF trustees must record in writing the reasons for the decision on where to store the motor vehicle and other personal use assets and keep these records for 10 years.
So in essence yes your SMSF can invest in a motor vehicle providing it meets the rules, but you cant use it!