Can SMSF Buy a Car? Let’s Clear Things Out.

Yes, you can buy a car using SMSF as long as you pass the ‘sole purpose’ test

When using your Self-Managed Super Fund (SMSF) to acquire assets, you must comply with several investment requirements. One of these is the sole purpose test, which states that SMSFs must be maintained to provide retirement benefits for fund members. Any purchases made using SMSF should solely benefit the fund members—and should not have direct financial benefits to a trustee or related party.

Can SMSF buy a car?

The answer is both yes and no. It all depends on the purpose of the purchase and if it meets the investment requirements of an SMSF. If the car is purchased for business purposes that benefit the fund, it can be considered a compliant investment. On the other hand, there could be an issue if an SMSF trustee used the fund to buy a car for personal use. That’s because personal-use assets are not allowed to be held in an SMSF. There are a few different ways to buy a car within SMSF, but you have to ensure the purchase complies with the sole purpose test, ATO rules and other requirements.

What kind of car can you purchase using SMSF?

Since you can only buy a car within SMSF for investment purposes, your best option is to purchase a collectable car. Investing in a collectable vehicle can be a profitable strategy for your SMSF. Like any investment, however, it can always go the other way, as the market for vintage cars and other collectables is hard to predict. It’s best to work with a classic car dealer or any industry expert before buying.

Also, remember that ATO rules specify that collectables purchased through SMSF shouldn’t provide direct financial benefits or any present-day benefit to the trustees, members or related parties. This means you can’t drive nor park an SMSF-purchased car in your home. Even looking at the car in your garage can be considered a present-day benefit, so you need to store it in a professional storage facility.

What about driving the classic car to an auto shop for repair or restoration? You must ask a non-related party to drive the car, like a representative from the storage facility or auto shop. Again, related parties can’t drive the SMSF-owned vehicle for any reason.

So, what about other collectables like art and jewellery?

Unfortunately, these are also not allowed to be held in an SMSF due to their personal use nature. However, some exceptions may depend on the specific item in question. For example, if the art is used to decorate the office of a business that the SMSF owns, then it may be considered a compliant investment.

In Conclusion

Be sure to consult with a professional before deciding what to purchase with your SMSF. The rules and regulations surrounding SMSFs are constantly changing, and it can be easy to make a mistake that could lead to costly penalties.

Get in Touch with SMSF Loans CO

When it comes to investing your super for a car, there are many considerations you need to satisfy. We offer SMSF lending services to help you find the right lending strategy to meet your financial goals.

Whatever you want to purchase, we only care about its benefits to your retirement. Get in touch with us today.

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