Many of our clients are interested in holding gold, silver and other precious metals in their SMSF. Throughout this article we will just refer to gold, but the same goes for all precious metals.
Gold and Silver Backed Crypto
Independent Reserve list a gold backed token called PMGT. Information regarding PAXG can be found here https://pmgt.io/. These coins are securely stored in the Perth Mint and guaranteed by the West Australian government.
Crypto backed bullion are very popular for a number of reasons. These coins …
- are backed 1 to 1 by physical bullion
- the bullion is securely stored
- the bullion is insured
- are generally ERC 20 tokens so can be sent to any ethereum address
- satisfy SMSF storage and insurance requirements
- have no fees for storage and insurance
- are the easiest way to own real bullion in your SMSF
The cost to cover the insurance and storage requirements are paid for by transaction fees of the coins so if you are simply buying and holding you effectively get the bullion stored and secured for free.
Owning physical gold in your SMSF is allowed but it needs to be securely stored and insured to satisfy the SMSF rules. The easiest way to satisfy this rule is to have a qualified custodian securely store it. You can get a safety deposit box under the SMSF name or have a bullion dealer store it for you. There are many reputable dealers around but 3 main bullion dealers in Australia are Ainslie Bullion (Brisbane), Perth Mint (Perth) and ABCBullion (Sydney & Perth). All 3 of these provide storage solutions that satisfy the SMSF rules. Storage costs are a tax deduction for the SMSF.
Each buy or sell order will come with a Trade Confirmation stating the following…
- The name of the account (make sure this the name of your SMSF)
- Whether the transaction was a buy or sell,
- The spot price (price per ounce)
- The weight traded
- The value of the trade
Storage costs are paid by your SMSF and are a tax deduction for your SMSF.
The Perth Mint provide storage for precious metals which are insured by the West Australian Government.
At the end of the financial year, your dealer/custodian will issue an EOFY Account Statement stating the following…
- The name of the account (again make sure this the name of your SMSF)
- Holdings of the account
- Estimated value of holdings
- Transaction list for the year
- Storage fees
We will require all the Trade Confirmations and the EOFY Account Statement from your dealer at tax time to complete the accounting for the tax return.
Keeping Bullion at Home
If for some reason you are unable to store your Gold with a custodian and need to keep the bullion at home Gladstone Claisebrook in Perth offer insurance for SMSFs holding bullion at home. This insurance is offered on a case by case basis so you will need to speak the insurer to ensure you can get covered before purchasing the bullion. Contact Steve from Gladstone Claisebrook on (08) 9315 2277 or email him at firstname.lastname@example.org. Keeping gold at home is not recommended as additional work is required by the auditor and there is no guarantee the auditors will be satisfied your fund is compliant.