The proposals, put forward in a government-commissioned review, aim to cut the exposure of a significant sector of the pensions market to investments that could be subject to large swings in value.
The review wants Self Managed Super Funds “to focus more on investing for retirement savings, rather than related party transactions, collectables and leverage” to “improve the safety and integrity of SMSFs, while continuing to allow a high degree of self-determination”.
Key preliminary recommendations include prohibiting investment in collectables and personal-use assets, such as artworks, wine collections, exotic cars and yachts.
Holdings would have to be sold off in their entirety over the next ten years, and it is the prospect of the market being flooded that has sent shockwaves through Australia’s art industry – as well as the pension holders themselves, who may be forced to offload their investments before they have realised their full potential.
“A ban on investing in art within SMSFs could cost the Australian primary art market an estimated AUS$100m in sales each year,” says the Australian Artists Association (AAA), which has set up Save Super Art, a national campaign opposed to the recommendations.
According to the AAA, art galleries across Australia report that 15 to 20 per cent of sales each year are to SMSFs.
“Removal of these sales would cause severe damage to the Australian art market, impact on the livelihood of visual artists, and lead to job losses and business failures within the art industry,” says the AAA.
“Indigenous artists, and indigenous arts communities, would be particularly hard hit, because of the high extent of financial support they receive currently through investment by SMSFs.
“There would be a knock-on effect across the whole art economy, affecting art suppliers, carriers, framers, publishers, gallerists and auction houses.”
The AAA is particularly concerned that such a wholesale sell-off within a decade would distort the market.
“The commercial art market is already suffering from the effects of the Global Financial Crisis, and is subject to additional uncertainty from new Resale Royalty Scheme,” the AAA added.
By Ivan Macquisten
