If you’ve been contemplating investing in a form of crypto currency within your self managed superfund, then we’d suggest you keep reading.
We’ve had a lot of enquiry over the last 6 months about investing in crypto currency within a self managed superfund. While we can’t advise on whether this type of investment is right for you, we can tell you what you need to be aware of before you enter this new market.
The most well known form of crypto is ‘Bitcoin’, however there are over 1,500 different types of crypto. To ensure the security of this new electronic cash system, a ‘blockchain’ is used to record (in a digital ledger) every transaction of every crypto currency.
As far as the Tax Office is concerned, they have advised that it is not deemed as money or a foreign currency. However, they have advised crypto will be liable for capital gains tax when bought and sold.
The ATO are not enamoured with a SMSF investing in crypto. However, at this time it is powerless to stop trustees of a SMSF investing in this type asset. It is a permissible investment within your SMSF as long as it satisfies the other rules for investment. The first of these rules is that it is allowable under the SMSF’s trust deed. It will also be necessary to check the fund’s investment strategy to ensure any investment made in crypto complies with the SMSF’s strategy.
Due to the electronic nature of crypto, there needs to be a clear separation of ownership between any crypto owned by the SMSF and that owned personally. The ATO have highlighted this as an issue of concern and will be something that is scrutinised when reviewing an SMSF’s annual tax work.
We would anticipate that while the current regulation framework for crypto is light, it is envisaged this will be unlikely to continue in the long term. Especially considering the ATO’s concerns in regards to this volatile currency.