Investing in Bitcoin and other cryptocurrencies
Guidelines have recently been issued by the ATO with regards to SMSF’s investing in Bitcoin and other cryptocurrencies.
Essentially, such investments are permitted where;
- The SMSF Trust Deed permits this type of investment
- The SMSF investment Strategy permits this type of investment
- That there exist clear evidence of a separate cryptocurrency wallet for the SMSF. That is a separate wallet to the one used by trustees and members personally.
- The valuation of the cryptocurrencies is in line with the ATO valuation guidelines. That is, the valuation is in Australian dollars, and reflecting a fair market value from a reputable source.
- The cryptocurrencies are not listing securities so they cannot be purchased by the SMSF from a member of the SMSF or a relative of that member.
- The ATO have advised that the investment is likely to break the Sole Purpose Test where affiliate fees or commissions associated with the SMSF’s cryptocurrency investment is paid to a member or trustee of the SMSF.
- Where the member is in pension stage, pension payments must be made in cash and not in-specie. That is, you cannot make in-specie cryptocurrency transfer to satisfy the minimum pension requirements.
To avoid breaking the SIS Act legislation and regulations, if you have any doubt about your superannuation investments please seek professional advice to ensure the tax benefits associated with of your SMSF are maintained.
Should you require any concerns regarding the above please feel free to contact Peter Quinn by submitting an online 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.