ATO statistics suggest about $20 million to $25 million was invested in artwork and collectables during the last financial year. According to Wasiliev – “that’s about half the $45 million of super money these investments attracted in the previous year, and a quarter of the $85 million to $90 million invested during each of the previous two years”.
This decline is the exact opposite outcome the Government pledged when it agreed to passing a Senate resolution in February 2011 that it would only enact the new super art laws if it was able to “ensure that any conditions do not act as a disincentive for DIY superannuation funds to invest in Australian art”. But it would not come as a surprise to anyone dealing with art on a retail level since July 2011.
The new rules strictly prohibit a DIY fund from storing artwork and collectables on any property that is considered a private residence of a DIY fund member or anyone related to a member. The new rules also require DIY funds to take out insurance on such investments within seven days of them being bought.
An insurance consultant quoted in the article said that since the introduction of the new super art rules most of the quotes requested for cover have related to rare coins, diamonds and gold. Undoubtedly this would be due to such collectables being easier and less costly to store than paintings and sculptures.
According to Wasiliev “these rules contrast with entitlements that funds have had to store but not display artwork and collectables on private property and lease it for display at a business. In these circumstances, says financial planner Liam Shorte of NextGen Wealth Solutions, the investments were often included in a member’s home and contents insurance policy or business policy”.
“The old rules now apply to almost all of the estimated $680 million invested by DIY funds in artwork and collectables, a minor DIY super investment category making up less than one-sixth of 1 per cent of total DIY fund assets”, he says.
Let me emphasis that last sentence: One-sixth of 1 per cent of total DIY fund assets.
At first glance you would think fixing the super art laws in line with the 2010 election promise would have a minimal effect on the Federal budget.
But this is where the broken promise on the super art laws runs into the much larger broken promise on the Federal budget returning to surplus in 2012/13 (which it will not) and the about-to-be broken promise Julia Gillard gave to Rob Oakshott and Tony Windsor that this Parliament would run a full term.
In other words expect the next Federal election in early 2013 and consider now to be the time to contact your local member to make the arts a high priority in the forthcoming campaign.
