Can SMSF's invest in cryptocurrency?
One common question asked by Self Managed Super Funds (SMSFs) in Australia is whether they can invest their superannuation in cryptocurrency. In this article, we will explore the regulatory requirements and considerations for SMSFs looking to invest in cryptocurrency in Australia.
The Australian Tax Office has declared that bitcoin and other cryptocurrencies are classified as capital gains tax assets. This ruling has further implications for SMSFs that wish to invest in this asset class.
SMSFs are permitted to buy cryptocurrencies, provided they comply with certain conditions. These include:
- Keeping records of cryptocurrency transactions.
- Ensuring that the investment is allowed under the fund's trust deed.
- Assessing the level of risk of a cryptocurrency investment, as the asset class can be quite volatile.
Trust deeds
When a fund engages in cryptocurrency transactions, it must also comply with the regulatory requirements that apply to investments in other assets. Trustees and members of an SMSF need to ensure that the investment is allowed under the fund's trust deed, and may need to review the investment strategy and/or trust deed in order to permit cryptocurrency transactions.
Cryptocurrency valuation
The value of cryptocurrencies must be in Australian dollars, and will be the fair market value obtained from a registered cryptocurrency exchange website. The Australian Tax Office will accept the 30th June closing value for cryptocurrency valuation purposes.
By understanding the regulatory requirements and considerations for SMSFs investing in cryptocurrency in Australia, trustees and members can make informed decisions about whether this asset class is appropriate for their fund.