SMSF Alternative Asset Guide
A practical guide to non-mainstream SMSF investments: collectibles, bullion, unlisted shares, private credit, start-ups, foreign assets, valuations, storage, insurance, in-house assets, and exit planning.
Key facts at a glance
About this guide: Super Informed maintains this page as general information for Australian SMSF trustees. It is reviewed each financial year and updated when ATO, ASIC, or superannuation guidance changes. It does not replace advice from a licensed financial adviser, SMSF specialist, registered tax agent, or solicitor.
Alternative assets are not prohibited just because they are unusual. The problem is usually evidence: market value, arm's length terms, no personal use, storage, insurance, liquidity, and whether the asset is connected to a member or related party.
The five core rules for alternative assets
An SMSF can hold many alternative assets, but the trustee must be able to show the investment was made and maintained for retirement purposes and on proper terms.
Key alternative asset terms before investing
Alternative assets are usually judged less by the headline asset class and more by evidence: who is connected, who can use it, how it is stored, and how market value is supported.
The fund must be maintained for retirement or death benefits, not current enjoyment or member support.
Asset typeCollectiblesArtwork, wine, jewellery, rare coins, memorabilia, vehicles and similar assets subject to special rules.
Related party limitIn-house assetLoans to, investments in, and some leases with related parties are generally limited to 5% of fund assets.
Market standardArm's length termsPrices, rent, interest, storage, valuation and exit terms should match what independent parties would accept.
External valuation support from someone independent of the fund and suitably qualified in the asset class.
The core requirements
Before acquiring any alternative asset, confirm that:
- The fund deed permits the investment
- The investment satisfies the sole purpose test and provides no present-day benefit
- The written investment strategy addresses risk, return, liquidity, diversification, and member circumstances
- The acquisition, holding, valuation, income, and exit terms are arm's length
- The investment does not breach related party, acquisition, loan, borrowing, or in-house asset rules
Sole purpose test
The test asks whether the fund is maintained solely for retirement, death, or permitted ancillary benefits. Alternative assets are high-risk because they can provide current enjoyment: art on a wall, wine in a cellar, a car in a garage, or business finance for a member's company.
In-house asset rule
In-house assets generally include loans to, investments in, and some leases with related parties of the fund. The market value of in-house assets must not exceed 5% of the fund's total market value.
Crypto moved: Cryptocurrency now has its own page. See the SMSF Crypto Guide for wallet custody, DeFi, swaps, staking, and crypto-specific audit evidence.
Alternative assets tend to fail at the evidence layer: a trustee may believe the investment is sensible, but the fund still needs objective market value records, related-party analysis, no personal use, storage evidence, insurance where required, and a credible exit plan.
Precious metals and bullion
Physical gold and silver are increasingly common SMSF alternative assets. The key distinction is whether the asset is bullion held for metal value or a collectible coin or item held partly for rarity, design, or numismatic value.
Bullion vs collectible coins
Bullion is generally not a collectible merely because it is gold or silver. Coins become more problematic where they carry a numismatic premium beyond metal value, are rare coins or medallions, or are acquired for collector value.
If an item is not a collectible, the specific collectibles storage and 7-day insurance rules may not apply. The sole purpose test, investment strategy, valuation, custody, and audit evidence requirements still apply.
Storage and insurance
A member's home safe is risky even where the bullion is not technically a collectible, because it can blur fund and personal assets and raise sole purpose concerns. A bank vault, commercial bullion vault, or professional storage facility is usually easier to defend.
The collectibles 7-day insurance rule may not apply to bullion, but insurance and asset protection are still prudent trustee risk management. Auditors may ask why a valuable physical asset is uninsured.
Valuation and records
Value bullion at 30 June using spot prices from a recognised commodities source or a documented custodian valuation. Acceptable evidence may include LBMA spot data, custodian statements, or a recognised exchange-traded gold product's published NAV where that is the relevant asset.
Keep purchase invoices, assay certificates, serial numbers, certificate of title if applicable, storage receipts, custodian agreements, insurance records, and 30 June valuation workpapers.
Bullion can be simpler than collectibles, but physical custody still needs a clean audit trail. A commercial vault record, serial or assay evidence, insurance decision, and 30 June spot-price workpaper are much easier to defend than a valuable asset held informally near personal property.
Collectibles and personal use assets
Collectibles are the most rule-heavy alternative assets in an SMSF. Artwork, wine, jewellery, antiques, rare coins, memorabilia, vehicles, boats, and similar assets can be held only if the fund follows the specific rules.
Collectibles acquisition checklist
- Check the deed permits the asset and the investment strategy supports the allocation.
- Obtain an independent market valuation where the price is not obvious, and get advice before any transaction involving a member or related party.
- Execute the purchase at market value and minute the trustee decision.
- Arrange insurance in the fund's name within 7 days of acquisition.
- Confirm commercial storage and document the reason for the storage decision in writing.
- Retain invoices, valuation reports, insurance certificates, storage receipts, and trustee minutes for audit.
Storage by asset type
- Artwork: commercial gallery, museum, or specialist art storage; not a member's home or office wall
- Wine: licensed bonded warehouse or professional wine storage; not a home cellar or member's restaurant
- Vehicles: registered storage facility; not a garage at a related party residence
- Jewellery: bank vault or specialist jewellery storage; not worn, displayed, or held personally
Insurance in practice
The policy should name the SMSF or trustee in trustee capacity as owner and beneficiary. Renewal gaps matter: a lapsed policy can create a breach even if the asset is otherwise stored correctly.
Keep the certificate of currency, policy schedule, valuation evidence used by the insurer, and renewal records with the fund's audit file.
What happens if you get it wrong?
Example: the fund buys a painting, hangs it at a member's home, and does not insure it. The auditor will likely identify personal use, prohibited storage, and missing insurance. The response is not just a note on file.
Trustees would usually remove the artwork from the home, arrange compliant storage, insure it in the fund's name, document rectification, consider voluntary disclosure, and expect the auditor to consider whether an Auditor Contravention Report is required.
Collectibles rules are bright-line in places trustees often underestimate: no private residence storage, no personal use, insurance within 7 days, and a written storage decision. These are usually easy to do up front and awkward to reconstruct later.
Unlisted investments and the in-house asset rule
Unlisted shares, units, trusts, private companies, and unregistered schemes often fail at the related-party and valuation stage. The rules apply both when the fund acquires the asset and while it continues to hold it.
Who counts as a related party?
The related party chain is broad. It can include members, relatives and associates, business partners, companies controlled by members or associates, and trusts where a member or associate has a controlling or majority beneficial interest.
Trustees should map ownership and control before investing. A company that looks unrelated at first glance can become related through indirect control, voting rights, family holdings, or trust interests.
Measuring the 5% limit
The in-house asset percentage is generally measured as market value of in-house assets divided by total market value of fund assets. If the 5% limit is exceeded at year end, trustees must prepare a written plan to reduce it to 5% or less, usually within 12 months.
A passive breach can happen if an unlisted investment rises in value or other fund assets fall. The required response still matters even if the breach was not deliberate.
Control and voting rights
If the SMSF's unlisted holding gives it effective control of a company or trust, further related party implications can arise. The entity may become connected to the fund even if it was not treated that way at acquisition.
Voting rights, shareholder agreements, option arrangements, and convertible securities should all be reviewed, not just ordinary share percentages.
Unlisted managed funds and LRBAs
A registered managed investment scheme is usually easier for an SMSF to assess than an unregistered private scheme because disclosure, pricing, governance, and valuation evidence are typically clearer. Unregistered schemes attract higher audit scrutiny.
Borrowing to acquire unlisted shares or units through an LRBA is possible only in narrow circumstances and attracts close scrutiny, particularly where related parties are involved. The fund should obtain advice before borrowing for private company or trust investments.
The related-party chain is broader than most trustees expect. A private company or unit trust can become an in-house asset because of indirect control, associates, voting rights, trusts, family holdings, or conversion rights, not just because a member's name appears on the register.
Private credit and peer-to-peer lending
An SMSF can lend money in some circumstances, but loans to members are prohibited and loans to related parties can become in-house assets. Private credit needs commercial documents, commercial pricing, and clear recovery action if things go wrong.
What lending is permitted?
- Unrelated third-party loans: generally permitted if arm's length and consistent with the strategy
- Loans to members: prohibited because the fund cannot provide financial assistance to members
- Loans to related parties: generally in-house assets and subject to the 5% limit
Arm's length loan terms
The interest rate, term, security, repayment schedule, fees, and enforcement rights should look like a commercial lender would accept. A below-market rate can provide a benefit and may create non-arm's length income or compliance issues.
Documents and defaults
A compliant loan file should contain the parties, principal, interest rate, repayment schedule, security, default rights, signed agreement, credit assessment, and payment records. At year end, value the loan as outstanding principal plus accrued interest, adjusted for impairment where evidence supports it.
If the borrower defaults, auditors will want evidence of recovery action: notices, correspondence, legal advice, security enforcement, impairment workpapers, and trustee minutes. A "friendly" unpaid loan to someone loosely connected to a member is exactly the kind of arrangement the ATO scrutinises.
Private lending only looks simple while repayments are current. Once a borrower misses payments, the trustee needs to behave like a commercial lender and preserve evidence of recovery action, impairment assessment, and arm's length enforcement.
Venture capital and start-up investments
Start-up investments can sit inside an SMSF, but they are difficult to value, often illiquid, and particularly risky where a member is a founder, employee, adviser, director, or major shareholder.
Common structures
An SMSF may invest through a direct share subscription, convertible note, SAFE-style instrument, or venture fund. Each structure has different valuation, rights, conversion, and audit implications.
The fund deed and investment strategy should specifically allow high-risk, illiquid private market investments before the fund commits.
The founder trustee trap
A founder wanting their SMSF to invest in their own start-up is usually dealing with related party and in-house asset issues. Even if the investment is at the same price as external investors, control and benefit questions remain.
Do not assume a small investment is harmless. Measure it against the 5% in-house asset limit and review whether the fund is indirectly supporting the member's business.
Valuation, ESIC, and failure
A recent arm's length funding round can be a strong valuation input. If there has been no external round, trustees need a defensible methodology such as net assets, recent independent offer, probability-weighted outcome, or an independent valuation.
ESIC tax incentives are aimed at individual investors and are commonly misunderstood; do not assume an SMSF receives the same offset. If a start-up goes to zero, keep evidence of insolvency, write-off, liquidation, failed recovery, and the trustee decision supporting impairment or capital loss treatment.
Overseas and foreign assets
There is no general SIS prohibition on foreign-listed or foreign unlisted assets. The same SMSF rules apply, with extra layers for foreign currency, valuation, tax reporting, and evidence.
Foreign assets and currency
Foreign unlisted investments still need sole purpose, arm's length, in-house asset, related party, and valuation analysis. Foreign currency can also be an SMSF asset class, but it needs year-end AUD valuation and proper records.
Use a consistent AUD conversion source, such as the ATO or RBA rate where appropriate, and keep the exchange rate evidence used in the annual accounts.
Foreign income and reporting
Foreign income is taxable in the SMSF unless an exemption applies. Foreign tax offsets may be available under Australia's tax treaty network, but the fund's tax agent needs enough records to calculate them correctly.
The SMSF annual return requires disclosure of foreign investments. Failing to report foreign assets can create data matching and audit risk.
Selling, transferring, and exiting alternative assets
Alternative asset compliance does not end at purchase. Exit is often where valuation, related party, benefit payment, and liquidity problems show up.
Selling collectibles
A collectible must be sold or transferred at market value. Where it is disposed of to a related party, the market value must be determined by a qualified independent valuer.
Independent means not the trustee, not a member, not a related party, and suitably qualified in the relevant asset class.
In-specie transfers and wind-up
Transferring a collectible or unlisted investment to a member on retirement is treated as a disposal by the fund at market value and a benefit payment to the member. Valuation timing matters.
On fund wind-up, assets cannot simply be handed to members at cost. Market value, tax, benefit payment, and transfer documents still need to be completed.
Liquidity planning
The investment strategy must address liquidity. Illiquid assets such as wine, classic cars, private shares, venture investments, and private loans can clash with pension minimums, benefit payments, tax liabilities, and member exits.
Auditors may ask how the fund will meet pension payments or expenses if a large part of the fund is locked in hard-to-sell assets.
Exit is where many alternative asset strategies become real. The same market value, related-party, benefit payment, and liquidity rules apply on the way out, so trustees should plan the disposal path before the asset is acquired.
Valuation and audit evidence
All SMSF assets must be valued at market value for the annual accounts. Alternative assets usually need more evidence than listed shares because there may be no transparent quoted price.
Valuation by asset type
| Asset type | Typical valuation evidence |
|---|---|
| Collectibles | Qualified independent valuation, comparable sales, insurance valuation, specialist auction evidence |
| Unlisted shares | Net asset backing, earnings multiple, recent arm's length transaction, independent valuation |
| Precious metals | Recognised spot price, custodian statement, bullion dealer valuation, assay certificate |
| Unlisted managed funds | Fund manager unit price, audited financial statements, redemption statement |
| Private loans | Outstanding principal plus accrued interest, impairment assessment, recovery evidence |
| Foreign assets | Foreign market value plus AUD exchange rate workpaper and foreign tax/income records |
What auditors check
- Asset ownership in the fund's name or trustee capacity
- Acquisition and disposal at market value on arm's length terms
- Investment strategy consistency, including liquidity and risk
- No personal use, member benefit, or related party lease/use problem
- Collectibles storage, insurance within 7 days, written storage decision, and no related party residence storage
- In-house asset calculations and written reduction plan if the 5% limit is breached
- Objective year-end valuation evidence and consistent methodology
SMSF alternative asset FAQs
These answers cover the practical questions trustees most often ask before buying, storing, lending, valuing, or exiting alternative assets inside an SMSF.
Can I store my SMSF artwork at home?
No. Collectibles cannot be stored or displayed in a related party's private residence, including garages, sheds, and land attached to the residence.
Can I drink the wine my SMSF owns?
No. SMSF wine cannot be used by a member or related party. Drinking it would provide a present-day personal benefit.
Can my SMSF buy artwork from me?
Generally no. Collectibles are not one of the usual exceptions that allow an SMSF to acquire an asset from a member or related party. The fund can sell or transfer a collectible to a related party at market value if the qualified independent valuation rules are met.
Can my SMSF invest in my business?
Only in limited circumstances. If the business is a related party, the investment is usually an in-house asset and must fit within the 5% limit.
Does my SMSF need insurance on collectibles?
Yes. Collectibles must be insured in the fund's name within 7 days of acquisition, and renewal gaps can create compliance problems.
What is the in-house asset rule?
It generally limits loans to, investments in, and some leases with related parties to no more than 5% of total fund assets by market value.
Can my SMSF lend money?
Yes to unrelated parties on commercial terms. No to members. Related party loans are generally in-house assets and subject to the 5% limit.
What valuation does my auditor need for unlisted shares?
A documented methodology, such as net asset backing, earnings multiple, recent arm's length transaction, or independent valuation, supported by current financial information.