Back in December last year the ATO provided guidance around investing in pink diamonds in an SMSF. It turns out there are some special considerations for these precious stones, especially when it comes to classifying them under superannuation rules.

Loose Diamonds – Not Collectables or Personal Use Assets

The ATO clarified that natural diamonds, including rare pink ones, aren’t considered “collectables” or “personal use assets” under SMSF regulations if they’re held in loose form. This distinction is important because “collectables and personal use assets” have specific rules around storage and insurance that don’t apply to loose diamonds.

What’s meant by “loose form”? Basically, it means the diamond hasn’t been mounted, integrated, or crafted into jewellery or any other item – a standalone gemstone, untouched by any setting or adornment.

Trustees and Auditors – Important Reminders

While loose diamonds don’t trigger the strict storage and insurance rules that apply to other SMSF collectibles, the ATO still recommends that trustees consider having adequate insurance and ensuring proper storage for such assets. Even if it’s not required, these precautions can protect the asset’s value and keep it safe.