Australia's art market threatened by proposed Superannuation changes

Art Press Release from Australia. Published by Rebecca Gabrielle Cannon on Tuesday 08 June 2010.

Proposed changes to Australian Self Managed Superannuation Funds (SMSF) may have a serious impact on the Australian art market, Tom Lowenstein, Executive Director of the Australian Artist's Association has warned.

The recent Cooper Review of SMSF has recommended that art be banned as a legitimate investment asset, threatening the estimated $100million invested in art by SMSFs each year in Australia.

However according to Lowenstein, "there is plenty of evidence to support art as a legitimate investment asset that can build retirement savings. And there are strict regulations in place to protect the integrity of art as an investment within SMSFs to satisfy the sole purpose of providing for retirement benefits.

“To our knowledge, the guidelines established by the ATO encompassing the sole purpose test in relation to art have been widely adopted by auditors, and are being applied consistently.”

Sydney-based art consultant and commentator Michael Reid says a number of significant art purchases have been abandoned recently because of the Cooper Review recommendations.

“Successful art investors in SMSFs necessarily take a longer term view, and the threat of a ban and ten year period to divest is a strong disincentive”, Mr Reid said.

One of Australia’s leading experts on Australian indigenous art and artists, Susan McCulloch, co-author of the industry authority “McCulloch’s Encyclopedia of Australian Art”, says the Cooper Review recommendations create a disturbing disparity in allowing APRA-regulated funds to invest in art, but banning Self Managed Super Funds.

“The union super fund CBUS is a perfect example of how targeted art investment can be of huge benefit to the community. The 310 works in this fund include many major pieces that have been long available to the public through loans to public galleries, and have also increased in value five fold. Denying art in SMSFs would therefore be of great detriment, not only to individuals but to the public.

“Take $100 million a year away from the Australian art market, and the effects will be devastating for visual artists, suppliers, indigenous communities, and small businesses. The most significant impact is likely to be on Aboriginal artists and their communities whose livelihood will be severely and immediately affected”, Ms McCulloch said.

Prominent Australian art market analyst, Roger Dedman, who publishes the annual Australian Art
Market Movements Handbook, says his research over many years confirms art as a legitimate
investment with which to build retirement savings.

“Carefully selected art held over a ten year plus period can confidently be expected to produce a
satisfactory rate of return when viewed purely as an investment”, Dr Dedman said.

A Save Super Art campaign has launched in response to the proposed changes, calling on the Rudd Government to rule out the recommendations in the belief that they are flawed, are already creating damaging uncertainty in the Australian art market, and, if implemented, would create disastrous “unintended consequences” for the Australian art industry.