Things to Consider
Are you considering investing in Bitcoin? If so, be aware of the following potential traps.
1. Assets purchased by a SMSF must be in the name of the Trustee and on behalf of the SMSF.
The problem here is that a bitcoin wallet is a prerequisite for purchasing Bitcoin. The issue that has been brought to our attention is that the wallet does not have the SMSF title on it.
It is imperative that the auditor of the SMSF can identify which assets have been purchased by the SMSF and owned in the name of the SMSF. If the bitcoin wallet is in the name of the member it may appear that the member has withdrawn monies from the SMSF, prior to satisfying a condition of release, to purchase Bitcoin personally.
2. Was the Bitcoin purchased from the member?
An asset can only be purchased by the SMSF from a member if it is business real property or listed securities, Bitcoin is neither.
3. Is the investment permitted by the Superannuation deed?
Each SMSF has a deed, the deed is essentially the rules of the SMSF. The Trustee(s) of the SMSF must satisfy the requirements of the trust deed as well as the Superannuation Legislation and Regulations.
That is, the investment in Bitcoin may be permitted by the Superannuation Legislation and Regulations but still needs to be permitted by the Superannuation Trust Deed. Many trustees fail to check with their trust deed which may in turn result in a breach.
5. Is the investment in line with your SMSF investment strategy?
As with point (3) above all SMSFs have an investment strategy.
You need to review your investment strategy to determine whether an investment in Bitcoin is consistent with the directions of the investment strategy.
Should you require any further information regarding superannuation fund investments please feel free to contact Peter Quinn by submitting an enquiry or calling us on +61 2 9580 9166 to book an obligation free appointment.
The information in this document does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. It is important that your personal circumstances are taken into account before making any financial decision and it is recommended that you seek assistance from your financial adviser.