While it is possible to purchase crypto with your superannuation. You do need to be vigilant in keeping the records of your trades.
Here are some guidelines that will help you stay on the straight and narrow regarding crypto transactions in your SMSF.
- There must be a clear paper trail of all crypto purchases. So there needs to be a clear trail from your SMSF bank account, to the exchange to the public key and back again if selling.
- All crypto purchases must be from a dedicated SMSF account. So you cannot mix any trades or holdings with personal accounts.
- All crypto holding addresses (public keys) must hold SMSF assets only. Again you cannot mix any holdings with your personal accounts.
- You cannot short, borrow or leverage to trade crypto.
- Any trades between cryptos (like from BTC to ETH) must also note the AUD value of both coins at the time of trade. This means that effectively all trades need to be recorded as going into and out of AUD. New Brighton Capital’s proprietary systems automatically calculate AUD values for trades. This a main reason why clients need to keep to New Brighton Capital’s approved providers when investing in cryptocurrencies with their super.
- If kept off an exchange, the ATO’s rule is that all private keys, passwords, paper wallets or hardware wallets must be kept under lock and key. Like in a locked filing cabinet or safe.
- Privacy coins may be purchased by SMSFs but need to remain on the exchange at all times. This is because auditors cannot verify the existence of privacy coins once they leave the exchange unless they have access to the private keys.
New Brighton Capital is working with exchanges to automatically create statements that satisfy all the record keeping requirements but until then you need to make sure you are keeping records yourself. If you have any questions regarding the best way to record the buying and selling of crypto in your SMSF do not hesitate to call us on 1300 264 022 or email firstname.lastname@example.org and we will be happy to assist. You can also see the government requirements here: https://www.ato.gov.au/Super/Self-managed-super-funds/In-detail/SMSF-investing/SMSF-investing-in-cryptocurrencies/
Tax obligations on Crypto Profits for your SMSF
The ATO has stated that crypto profits are subject to CGT (Capital Gains Tax). This means that any if you sell within a year of buying the tax paid on the profit is 15%. But if you sell after 1 year, your profit is taxed at 10%. If you make a loss on a crypto investment, that loss can be carrier forward to offset any capital gains payable in the coming years. More information regarding capital gains and SMSF’s can be found on the ATO website here: https://www.ato.gov.au/Super/Self-managed-super-funds/In-detail/SMSF-resources/SMSF-technical/Exempt-current-pension-income/?page=7
“New Brighton Capital offers guidance and assistance in the set-up of Self-Managed Super Funds (SMSF) & the ongoing accounting admin associated with SMSFs. New Brighton Capital does not offer financial advice as is not licensed to provide financial product advice under the Act, except for the sole purpose of, and only to the extent reasonably necessary for, ensuring compliance with the superannuation legislation and advice on the process of creating ,winding up or exiting an SMSF as per regulation 7.1.29(5) of the Corporations Regulations 2001.
All other information provided by New Brighton Capital is factual information only and is not intended to recommend or state an opinion of New Brighton Capital or otherwise be financial product advice, and should not be relied upon as such. Prospective clients should consider taking advice from the holder of an Australian Financial Services Licence before making a decision on a financial product.“