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Everything you need to know about SMSF and cryptocurrency | cryptopolitan

Participants in self-directed super funds (SMSF) are known to often choose a property or even stocks to invest. Cryptocurrency is also gradually joining the list as a popular and reliable form of investment for all. SMSF Setup.

The ATO (Australian Tax Office) report for 2020 to 2021 indicates that the total amount invested in cryptocurrency by SMSF investors was $212 million. That was just $190 million when the asset class listed in June 2019. An increase in the number of investors means other investors will also start looking to expand their portfolios. This rise is not going to see a decline anytime soon. We’ve compiled this guide to help you make the best choices possible. Today, we’ll be looking at four things every investor should know about SMSFs and cryptocurrency investing.

Overview: Cryptocurrency and SMSF

Cryptocurrency has similar characteristics to traditional currency, except that it is purely digital. Another major difference between cryptocurrency and traditional currency is decentralization. This means that the cryptocurrency is directly exchanged between two people without the intervention of a bank or a third party. There are no geographical or political restrictions and all cryptocurrency owners can store their digital money in a personal online wallet.

Since the ATO now recognizes crypto as an asset for tax requirements, SMSF investors can now invest their retirement money in the crypto market. Self-directed Super Funds allow anyone to have full control over their retirement savings. It is up to them how they invest, what risks they are willing to take, and whether they want to invest in crypto.

4 things you need to know about SMSF and cryptocurrency

Now that you have a general idea of ​​SMSFs and crypto, it’s time to look at some important things you need to know before investing:

The trust deed and investment strategy must allow for cryptocurrency investments

Since crypto is an asset, your funds trust deed and document setting out your investment strategy must allow you to invest in digital assets. An SMSF fiduciary will have no problem if their documents already contain a clause allowing such investments. However, you will need to obtain the necessary modifications to be legally authorized if you do not already have authorization. You will be allowed to invest in crypto users by the SISA (Superannuation Industry Supervision Act) 1993 and SISR (Superannuation Industry Supervision Regulations) 1994. Your investment strategy document should also clearly define the specifics of liquidity and the risks involved due to cryptocurrency investments.

Crypto is not recognized as a cash investment by the ATO

The ATO does not consider crypto as a cash investment. Instead, they recognize it as a capital gains tax (CGT) asset. This means that you must take into account several tax rules to invest:

  • All investment expenses are not considered a tax reduction unless an individual is a cryptocurrency trader
  • All crypto investments trigger CGT, which means you will have to pay 10% to 37% on every successful cryptocurrency sale

It is important to note that tax laws and super laws only apply to SMSF members once they have reached the retirement phase. If an SMSF member sells crypto during the retirement phase, they will not have to pay CGT.

Transaction history should be visible to auditors

All SMSF members or administrators must ensure that they are fully prepared for the audit. This means that auditors should be able to easily view and identify the transaction history of a crypto wallet registered under the name of the SMSF holder.

Virtual wallets are unique, but do not provide transaction details related to an SMSF, so it is a good idea for a trustee to create a new bank account. This allows auditors to trace and track payments while easily matching them to the fund’s bank account.

  • All SMSF transactions must pass the sole purpose test to prove that all profits made are solely for the benefit of an SMSF fund
  • Personal property and common property must be separated so that the ATO does not consider the transactions as a violation of the sole purpose test
  • An SMSF fund must receive a digital wallet which is not mixed with members’ personal wallets

Cryptocurrency must not be obtained from a third party and must coincide with annual validation requirements

The SIS Act states that it is illegal to obtain crypto assets from third parties, including family, relatives, members, trustees, businesses, or trusted units. This simplifies all transactions.

SMSF members are also not permitted to sell or gift personal crypto assets to an SMSF fund.

Crypto profits should only be made through an unknown third party. All assets should also be adjusted for actual or current market values. This is difficult because crypto changes rapidly every day. As a result, the ATO allows annual or annual validation of the funds. All funds must be valued through a reputable digital currency exchange on the same date each year.


Since cryptocurrency investments have become so popular, the ATO comes up with new rules, tax obligations, and regulations. You should also make sure to keep the SMSF fund rules in mind. The four things we listed above are good enough to start with but don’t count as the ultimate list. It’s a good idea to get in touch with an SMSF accountant so that you can navigate an SMSF setup and cryptocurrency investments smoothly.

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