Michael Levitt argues reforming Self Managed Super Fund legilsation, particularly as applies to art, to remove the "excessive and intrusive Governmental regulation, a nanny state mentality, absurd economics, selective discrimination against the art industry and Mao-style cultural censorship":
I strongly support the Government’s right to encourage investment for the purposes of retirement by offering tax concessions for legitimate superannuation investments. Yet, despite creating these tax concessions, the Government remains uncomfortable about providing them. They seem to regret the loss of tax revenue, especially where an SMSF director also uses the investment for immediate and pragmatic benefit.
In order to eliminate inappropriate access to tax concessions for non-investment, immediate-use items, the Government has relied upon a definition of legitimate superannuation investment referred to as “The Sole Purpose Test”. According to this standard, a legitimate SMSF investment must be demonstrably for the purpose of delivering income in retirement. By irrational extension, they have also determined that anything that also provides immediate benefit must be inherently unable to provide income upon retirement.
Art as an SMSF investment represents an awkward problem for the Government. Art can be an excellent long term investment but there is widespread ignorance and scepticism about what makes any particular piece of art likely to appreciate in value over time. To the unfamiliar, art investment can seem random and illogical. Meanwhile, hanging a piece of art delivers an undeniable immediate benefit. Doubtless, many pieces of art that have been acquired by SMSFs in Australia over the last 20 years or more were, from the start, unlikely long term investment prospects; indeed, many of these will have been purchased primarily for decorative purposes while still attracting a tax concession.
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