Guidelines for buying diamonds with your SMSF

As with all assets held in your SMSF, there are a number of administration and compliance responsibilities for Trustees who choose to invest in diamonds, art, or other collectibles.

Please note, the following information is a guideline only. Be sure to consult your SMSF advisors to fully understand the requirements.

Since 1 July 2011, diamonds owned by SMSFs must be held according to new regulations regarding storage and insurance that will come into full effect from July 2016.

Click here to view the ATO’s useful summary of the SIS Act (Superannuation Industry Supervision Act) regulations relating to diamonds and other collectibles.

STORAGE          The diamonds you purchase for your SMSF may not be displayed or stored in your home, nor the home of any related party of the SMSF. This storage requirement has been introduced to prevent SMSF trustees receiving a personal benefit from the SMSF investment. Storage Options >

SMSF      trustees must record in writing the reasons for the decision on where the diamonds will be stored, and keep that record for 10 years.

INSURANCE      SMSF trustees must ensure the diamonds are insured in the name of the fund within 7 days of acquisition.

VALUATION       Valuations must be performed on a regular basis by a qualified independent valuer. 

SALES               Diamonds can be sold to a related party provided the sale is at a market price as determined by an independent valuer

USAGE        Diamonds are not to be used by any related party of the SMSF (which unfortunately means you can’t wear them for fun!).

LEASING         You may not lease any diamonds in your portfolio to any related party of the SMSF. A ‘related party’ includes the SMSF members and their relatives, and any partnerships, partners of partnerships (if a member is in partnership with them), and trusts and companies that SMSF members control.

As part of your diamond investment through Australian Diamond Portfolio, we include professional third party storage and insurance with each diamond purchased for both SMSF and private investors, as well as independent diamond valuations >