The federal government should consider introducing the British concept of 'taxable property' for self-managed superannuation funds (SMSF) to avoid some of the more exotic and highly risky investment strategies, according to Tria Investment Partners.
The introduction of such a concept would make it unattractive for trustees to invest their SMSF in collectables or residential property.
"We think taxable property is an elegant concept - in one swoop we could solve the SMSF problems we already see relating to collectables, the problems we are going to see with heavily-geared residential property . and no doubt endless future kooky ideas," Tria managing partner Andrew Baker said.
"It would establish reasonable limits around the investment practices of SMSFs, while still permitting a wide choice of mainstream investment strategies."
In the United Kingdom, taxable property covers residential property and most assets that can be touched and moved, including art, antiques, jewellery, fine wine, classic cars and yachts.
These investments attract a tax charge of about 40 per cent, which removes the tax advantages on assets that may create an opportunity for personal use.
The concept applies to the UK pension vehicle, the self-invested personal pension, which has strong similarities with SMSFs.
Baker said this example could be used in Australia to avoid SMSFs adopting questionable investment strategies.
"It would mean that tax concessions are not used to subsidise art collections, other exotic assets, or high-risk strategies which represent a bad deal for the taxpayer," he said.
