The ATO have recently released guidance for self-managed superannuation funds (SMSFs) investing in cryptocurrencies. To invest in crytocurrencies, the investment must be allowed under the SMSF trust deed and be in accordance with the investment strategy.
When an SMSF acquires and disposes of cryptocurrency, it faces the same taxation and regulatory issues that apply to all other investments. Please see our earlier article regarding the tax implications of investing in cryptocurrencies.
Below we have highlighted some of the key issues for SMSFs when investing in cryptocurrencies:
Trustees need to ensure that the SMSF has clear ownership of the cryptocurrency (ie. there must be evidence of a separate cryptocurrency wallet for the SMSF). The SMSF wallet must be managed separately from the personal and business cryptocurrency investments of the trustees and members.
The cryptocurrency will need to be reported at market value at 30 June. The ATO have advised that they will accept the 30 June closing value published on the website of a cryptocurrency exchange that reports on historical cryptocurrency values.
Related party transactions
Subject to certain exceptions, an SMSF is prohibited from acquiring assets from related parties (eg. from members). Cryptocurrencies do not fall within any of the exceptions. As such, an SMSF cannot acquire cryptocurrencies from trustees or members.
We recommend that you seek independent financial advice when determining whether investing in cryptocurrency is appropriate for your SMSF.
Please do not hesitate to call us on (07) 56656469 if you would like to discuss the tax and regulatory implications of investing in cryptocurrency in your SMSF.
DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent,
Jeanette has over 20 years experience as an accountant in public practice. She is a Chartered Accountant, registered tax agent and accredited SMSF Association advisor. When she is not helping business owners grow their empires, you will likely find her out running on the trails or lifting weights in her local CrossFit gym. Book in to see Jeanette today.