Self-Managed Super
Yes, your SMSF can hold pink diamonds
The ATO has confirmed it. A natural pink diamond held in loose form is not a collectable, which means it avoids the strict rules that apply to jewellery, art and the like. The detail is what matters, so here it is in plain terms.
Held loose
Loose stones, not jewellery.
That one distinction is what lets your fund hold them outside the collectable rules. Here is how it works.
It comes down to loose versus set
The same diamond is treated two completely different ways depending on whether it is loose or mounted. Get this right and the rest is straightforward.
Not a collectable
A certified natural pink diamond held loose is treated like any other fund investment, similar to gold bullion. It sits outside the collectable rules in the super law.
- No special in-home storage ban to worry about
- Still must meet the sole purpose test and general rules
- The straightforward path for most SMSF investors
Becomes a collectable
Set the very same stone into a ring or pendant and it becomes a collectable under regulation 13.18AA, with a stricter set of obligations.
- Cannot be worn or used by a member or related party
- Cannot be stored in a member's home
- Specific insurance and record-keeping duties apply
For a super fund built for investment, loose stones are almost always the sensible choice. We source and hold them that way by default.
Six things your fund needs to get right
None of this is unusual for an SMSF. It is the same discipline you already apply to any other asset the fund holds.
Buy at arm's length
The stone must be purchased at market price from an unrelated third party, in the name of the fund. It cannot come from you or a related party.
Meet the sole purpose test
The diamond has to be held to provide retirement benefits, not for present-day enjoyment. No wearing it, no display at home.
Name it in your strategy
Your fund's investment strategy should record the holding and explain how it fits the members' retirement goals and the fund's approach to risk.
Value it regularly
The diamond is valued at market rate for the fund's accounts, generally every one to two years, so the fund's position is reported accurately.
Store and insure sensibly
Loose stones do not carry the strict collectable storage rules, but independent secure storage and insurance in the fund's name is prudent and expected by auditors.
Keep clean records
The certificate, purchase invoice, chain of custody and valuations all sit with the fund. Your auditor will want to see them.
We handle the parts that trip funds up
Most compliance problems come from paperwork and provenance, not from the diamond itself. That is exactly the part we take off your hands.
- We sell to the fund at market price as an unrelated party, so the arm's length rule is met cleanly.
- Every stone comes with its Argyle certificate and full chain of custody for your auditor.
- We arrange independent secure storage and insurance in the fund's name.
- We provide market valuations on the schedule your accountant needs.
- We work alongside your accountant or adviser, not around them.
Australian Diamond Reserve provides general information only. We are not licensed to provide financial product advice and do not hold an Australian Financial Services Licence (AFSL). Nothing on this website is financial, investment, tax or legal advice, or a recommendation to buy or sell any product. Diamonds are a physical asset and their value can fall as well as rise; past performance is not a guarantee of future returns. Consider your own circumstances and seek advice from a licensed financial adviser and a registered tax agent before making any decision. SMSF rules are complex and depend on your fund's deed and circumstances. Always confirm your position with your accountant, auditor or a licensed adviser before acting.
Talk through your fund's options
Tell us a little about your SMSF and what you have in mind. We will walk you through how a compliant holding would work, with no pressure.
Start a confidential conversation