Cryptocurrency self-managed super funds (SMSFs) are a new type of investment fund where the investor has complete control. This means that investors can make all decisions about what assets to buy and sell, without needing to rely on the advice of financial professionals.
While SMSFs have many advantages, there are also some risks associated with this type of investment. Before investing in an SMSF, it’s important to do your research and understand all the risks involved.
People are increasingly using cryptocurrency self-managed super funds (SMSFs) to invest in digital assets. This is because SMSFs offer many advantages, such as flexibility, control, and tax advantages.
However, SMSFs also come with some risks. For example, if the value of your cryptocurrency decreases, you could lose money. Additionally, SMSFs are not regulated by financial authorities, so you will need to do your research to make sure you are investing in a reputable fund.
The ATO has published guidance on how SMSF trustees should consider cryptocurrency assets. The guidance points out that crypto-assets should be regarded as collectable for SMSF purposes. Any gains or losses on the discarding of a crypto asset will be treated as a capital gain or loss.
The ATO has also claimed that crypto assets cannot be used to pay SMSF expenses other than data and software costs associated with obtaining or discarding the crypto asset.
The ATO has clarified that they expect SMSF trustees to provide an account of their holdings in cryptocurrency. Cryptocurrency is a sensitive asset class, and the ATO’s guidance is essential for trustees. But do we have the time to keep track of all that when we’re already trying to record our regular accounting?
Although SMSFs are not currently under the same reporting requirements as other types of investment funds, the ATO has signalled that this might change. For SMSF trustees wanting to invest in cryptocurrency, it is crucial to be mindful of the potential accounting and tax consequences. If you would like to talk about your circumstances, schedule a call with one of our SMSF experts.
