This is just something I was randomly thinking about today but wondering if anyone has ever looked into using a self managed super fund (SMSF) for the purposes of collecting transformers?

Now there are various rules surrounding the purchase of collectables by SMSF's but it is legal. I am looking at this from the perspective of purchasing items that you would think will appreciate over time with a view to either selling them for profit in coming years or holding them until retirement.

The rules for SMSFs specify, among other requirements, that the collectables cannot be:

1. leased to, or part of a lease arrangement with, a related party
2. used by a related party
3. stored or displayed in a private residence of a related party. (this might be problematic)

The decision on where the collectables are stored must be documented and the written record kept for 10 years, and the item must be insured within seven days of the fund acquiring it. If the collectable is transferred to a related party, this must be at market price determined by a qualified independent valuer.

From a realistic standpoint, if I was to buy transformers they are not going to be leased or used by a related party.

I would prefer to have them stored at home but this could be overcome possibly by having a secure storage facility (I would think tax deductible given its purpose). Alternatively, and I don't know how accurate this is, but if you had a friend on these boards you could each verbally agree to buy the same items and store them at each others residential addresses. Should get around the private residence exemption.

I know that a lot of people don't necessarily have SMSFs but I look at my collection as an investment that I want to pass onto my son one day. Nothing wrong with wanting to make some money off it either.

Anyone have any thoughts on this, think I am way off base and wasting my time or just generally nuts for thing about this?