There has been good money made for some people from selling classic cars over the past few years. Even new cars can be worth more than what was originally paid for as soon as it is taken off of the lot.
This is a rare occurrence, however, and to make money out of a car, you need to know what you are doing.
Collectible Motor Vehicles and Cars.
But what if you are an expert and see the perfect buy that requires $100,000 (and your only access to that money is through your superannuation), can you make this purchase with your SMSF?
There is no sense in thinking that your super fund will simply be able to go and buy a classic car for your enjoyment. It will not be stood for, and you will likely lose money and the car.
Purchasing a classic car can be done, but only if a very strict set of rules are complied with.
What type of assets can you have in your Super?
This strict set of rules applies not only to cars but also to what the law calls “collectibles”. These collectibles extend to stamps, artwork, wine, coins, memorabilia, and others.
The rules require that the collectibles are insured in the name of your fund, that they are kept away from your place of residence, and that you are not allowed to use them at all (a classic car can’t be driven to the mechanic, for example). Repurchasing these collectibles from your fund will require a formal written valuation.
While investing in a collectible is allowable in an SMSF, it should only be used for proper investment purposes. It should not be thought of as a way to buy something ‘cool’ with your superannuation money.
After carefully considering your options regarding these collectibles, the costs, and whether or not it is a proper investment, it can be done. It’s advisable to speak with us first to ensure you are prepared and in compliance with the rules. Start that conversation today.
What is Super?
Superannuation is a form of retirement savings scheme in Australia where employees contribute a percentage of their earnings to a retirement fund managed by a superannuation fund.
The contributions are invested to earn interest and grow over time, providing financial security in retirement.
While superannuation is meant to be a long-term investment, there are some instances where individuals may be able to access their super early through various loopholes.
However, accessing super early can have significant long-term financial consequences, including reduced retirement savings and potential tax implications.
It is crucial to carefully consider all options before accessing your super early.
Here are some of the loopholes that allow access to superannuation before retirement:
- Financial hardship Individuals who are experiencing severe financial hardship may be eligible to access their superannuation early. To be eligible, you must have received government income support for a continuous period of 26 weeks and be unable to meet reasonable and immediate living expenses. If eligible, you can access up to $10,000 of your super in any 12-month period.
- Terminal medical condition Individuals who have been diagnosed with a terminal illness may be able to access their superannuation early. To be eligible, you must have two medical practitioners certify that you have a life expectancy of fewer than 12 months. There is no limit to the amount you can withdraw in this case.
- Permanent incapacity Individuals who are permanently incapacitated and unable to work may be able to access their superannuation early. To be eligible, you must have two medical practitioners certify that you are unlikely to ever work again in a job for which you are qualified. There is no limit to the amount you can withdraw in this case.
- Temporary residents leaving Australia Temporary residents who have left Australia permanently may be able to access their superannuation early. To be eligible, you must have held a temporary visa and have left Australia permanently. You can access the super that you contributed while working in Australia.
- Severe financial hardship due to COVID-19 Due to the economic impacts of the COVID-19 pandemic, the Australian Government has allowed early access to superannuation for individuals experiencing severe financial hardship. Eligible individuals can access up to $10,000 of their superannuation in the 2020-21 financial year and an additional $10,000 in the 2021-22 financial year.
It is important to note that accessing superannuation early should be a last resort and carefully considered before making any decisions. Early access to superannuation can have significant long-term financial consequences and reduce retirement savings. Seeking advice from a financial advisor or accountant can help you understand the potential implications of accessing your superannuation early and ensure you make an informed decision.