Investing wisely in a Self-Managed Super Fund (SMSF) requires careful consideration of asset choices to ensure compliance with super laws and the best financial interests of fund members. Recently, the Australian Taxation Office (ATO) has shed light on the classification of pink diamonds within SMSF investments. In this blog post, we’ll explore whether pink diamonds are considered collectable or personal use assets, and discuss insurance and storage recommendations for these precious gems.
Pink Diamonds in SMSF Investments:
According to the ATO, natural diamonds, including the coveted pink diamonds, are not classified as collectable or personal use assets when held in loose form within an SMSF. This distinction is crucial for trustees, as it means that specific storage and insurance requirements, usually associated with collectables, do not apply to diamonds in their loose form.
It’s important to note that the term “diamonds held in loose form” implies that the diamond should not be mounted, integrated into, or used as an item for adornment or other purposes inconsistent with holding it in loose form for investment purposes. Trustees and auditors must strictly adhere to this criterion to maintain compliance with superannuation legislation.
Insurance and Storage Recommendations:
While pink diamonds in loose form may not be subject to specific storage and insurance requirements, trustees should exercise prudence and adopt sound practices in safeguarding their SMSF assets. Adequate insurance coverage and thoughtful storage arrangements can provide additional protection against potential risks.
To safeguard the value of pink diamonds and other SMSF assets, trustees should consider obtaining comprehensive insurance coverage. This coverage should address risks such as theft, loss, damage, or any unforeseen events that may impact the value of the investment. Engaging with reputable insurers experienced in handling valuable assets like diamonds can ensure tailored coverage that meets the unique needs of SMSFs.
Choosing the right storage facility is crucial for preserving the integrity of pink diamonds. Opting for secure and specialised storage facilities with climate control features can mitigate the risk of environmental damage, ensuring the diamonds maintain their quality over time. Trusted vaults and facilities equipped with state-of-the-art security measures provide an added layer of protection against theft and unauthorised access.
Investing in pink diamonds within your SMSF can be a brilliant choice, given their exemption from specific collectable and personal use asset requirements. However, responsible trustees should prioritise adequate insurance coverage and secure storage arrangements to safeguard the fund’s assets. By adhering to these sound practices, SMSF trustees can confidently include pink diamonds in their investment portfolios, combining the allure of these precious gems with a commitment to prudent financial management.