I found the recent Picasso exhibition to tour Sydney particularly enlightening because the artworks were all from the artist’s personal collection. Picasso referred to his paintings as “the pages from my diary”, so the pieces he chose to keep for himself were obviously especially significant to him. Observing the paintings it’s clear they reflect his vast range of emotions, the turbulent times in which he lived, and the abundance of lovers he took. Apparently his lovers could tell when they were shortly to be replaced by the changing style with which he depicted his incumbent amour on canvas – initially soft, sensuous and flattering moving in due course to strong, stylized and often quite unattractive. An overt hint – time to move on!
Looking closely at each painting’s exhibit label, each was attributed to “Pablo Picasso gift in lieu”. The paintings and sculptures had been given to the French state by the artist’s family in lieu of taxes owing after Picasso’s death. This must have been a huge wrench for the family but the happy outcome is that we have had the pleasure of seeing this great artist’s original works.
It got me thinking about owning art as an investment and the value we place on something that is ultimately an object of personal enjoyment and appreciation. It doesn’t give us investment returns in the traditional sense that is: raw monetary return. Therefore this type of investing would fall more to the well heeled for personal use or as a collectable item, which they may hope increases in value over time (certainly would do if you were lucky enough to own a Picasso!).
Some of you may be aware that owning collectables such as art (also coins, wine collections, jewelry, antiques etc) is possible as an investment in your self managed super fund, where you generally have more flexibility in what you are able invest in. It sounds too good to be true, what’s the catch? Self managed super funds are the fastest growing category of super fund in the country, so the regulation of them has attracted a lot of attention from the ATO. As investments in all qualifying super funds are given favourable tax rates (saving for your retirement remember!), the ATO was not overly keen on subsidizing individual’s expensive habits such as collecting Ferraris or that 60-foot cruiser moored in Sydney Harbour. Hence a crackdown on the conditions under which your personal superfund is able to hold this type of asset.
What are the conditions? The main test for owning any asset in your superfund is that it should be held for the sole purpose of funding your retirement. If it fails this so called “sole purpose” test, your fund may be disqualified and all earnings could be taxed at the highest marginal rate. Because the penalties are so high it is worth sitting up and taking note. Either refrain from holding personal use assets in your fund (my recommendation!), or make sure your artwork (read stamp collection, bottle of Grange etc) is packaged and stored away from your or any related party’s personal residences. That’s right - it cannot be kept at your home or any of your family’s, even if in the storeroom. If you have such items in your fund it is worthwhile to check with your financial adviser or accountant that you are in compliance with the regulations.
Looking closely at each painting’s exhibit label, each was attributed to “Pablo Picasso gift in lieu”. The paintings and sculptures had been given to the French state by the artist’s family in lieu of taxes owing after Picasso’s death. This must have been a huge wrench for the family but the happy outcome is that we have had the pleasure of seeing this great artist’s original works.
It got me thinking about owning art as an investment and the value we place on something that is ultimately an object of personal enjoyment and appreciation. It doesn’t give us investment returns in the traditional sense that is: raw monetary return. Therefore this type of investing would fall more to the well heeled for personal use or as a collectable item, which they may hope increases in value over time (certainly would do if you were lucky enough to own a Picasso!).
Some of you may be aware that owning collectables such as art (also coins, wine collections, jewelry, antiques etc) is possible as an investment in your self managed super fund, where you generally have more flexibility in what you are able invest in. It sounds too good to be true, what’s the catch? Self managed super funds are the fastest growing category of super fund in the country, so the regulation of them has attracted a lot of attention from the ATO. As investments in all qualifying super funds are given favourable tax rates (saving for your retirement remember!), the ATO was not overly keen on subsidizing individual’s expensive habits such as collecting Ferraris or that 60-foot cruiser moored in Sydney Harbour. Hence a crackdown on the conditions under which your personal superfund is able to hold this type of asset.
What are the conditions? The main test for owning any asset in your superfund is that it should be held for the sole purpose of funding your retirement. If it fails this so called “sole purpose” test, your fund may be disqualified and all earnings could be taxed at the highest marginal rate. Because the penalties are so high it is worth sitting up and taking note. Either refrain from holding personal use assets in your fund (my recommendation!), or make sure your artwork (read stamp collection, bottle of Grange etc) is packaged and stored away from your or any related party’s personal residences. That’s right - it cannot be kept at your home or any of your family’s, even if in the storeroom. If you have such items in your fund it is worthwhile to check with your financial adviser or accountant that you are in compliance with the regulations.
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