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A question often asked by SMSF members is if SMSF Gold is possible. Hence, they want to know if the superannuation fund they belong to can invest in gold. If you consider investing in gold or other precious metals, you must consider a few things. First, you need to consider if the investment can fall within the definition of collectables and your personal use assets.
So, investing in gold can be bullion, ingots, or coins. First, gold bullion, a gold dealer recognised by its fineness and weight, is purchased at the current price with a small cost incurred for refining, fabrication, and shipping the gold bullion to you.
Hence, it means refined yet stamped with a weight of precious metal like gold bricks. On the other hand, gold ingots is sometimes referred to as gold bars but have a different form than minted bars. This is because the weight can vary as it is poured and not stamped, and they are thicker.
While gold coins have two different forms, one valued for the bullion amount or one with a rare historical value called numismatic coins. The bullion coins are solely valued on the precious metal it contains and the demand. These coins investors buy for long term storage and wealth.
The numismatic coin might have a more excellent value than the precious metal. On the other hand, it may add costs embedded into the price. The reason is that it can be rare, have a grade, and demand. Hence, it is more than collecting coins; it is a functional currency, and you are interested in history and artistry. Therefore, it is bought mainly by collectors and not for investment.
Now to come back to SMSF Gold as a collectable or personal use asset. When you look at the Australian Taxation Office, these items are artwork, boats, jewellery, coins, and banknotes, to name a few. If the value of the coins exceeds the face value, it is treated as collectable like numismatic coins.
The same applies to gold bullion coins if the value exceeds the face value and they are traded at a price above the spot price of gold. Yet, gold bullion or ingots is not a collectable or even a personal use asset.
So, in principle, an SMSF member can invest in gold if they have not acquired it from a related party. Hence, you need to consider storage to protect your gold assets. Hence, the gold needs to be stored in a secure place like a vault service, not the home.
Furthermore, the gold needs to be insured in the SMSF name while maintaining gold investments’ purchase or sales documents. The reason is that the Tax Office tightened guidelines for SMSF investing in personal use assets and collectables.
Hence, it cannot be a person in their private residence when it falls into these two categories. Thus, if you are an SMSF member wanting to invest in gold. Contact a trustworthy gold dealer to help you with a depository solution as it is the best practice concerning audit and reporting obligations. Read all the facts about the gold depository here.