You must have heard many people talking about cryptocurrencies. It has been discussed as the most popular forum as an investment tool. Looking at the graph of popular cryptocurrencies, you will find that most of them have given a massive return. Due to its lucrative nature, investors’ focus has switched to cryptocurrencies. In Australia, one such popular way of investing in crypto is through Self managed super cryptocurrency. The popularity has prompted the Australian Taxation Office (ATO) to press down on regulatory rules and tax obligations. In this post, we are going to talk all about the SMSF in detail:
Cryptocurrencies like bitcoin are Capital Gains assets, and SMSFs can buy, sell, and invest in them just like any other asset, but they must adhere to the same regulatory obligations as conventional asset investments. Cryptocurrency is an asset. The SMSF is permitted under the trust deed. The fund’s trustees may need to alter their current trust deed or even issue a new deed. The other thing is that SMSF trustees and members should consider the investment’s risk level before investing in cryptocurrency. The trustee can review the plan, and if necessary, it can be updated by the trustees, and members must approve that. Now the question comes about the ownerships the trustees and members are required by the super laws to keep their fund’s assets separate from their assets. The cryptocurrency investments are needed to be stored and managed independently from the trustees and members. It means the funds have a different cryptocurrency wallet for the SMSF than those used by trustees and members.
Also, the SMSF auditors need to identify trading history when the time comes for an audit. They can identify the trading history for the SMSFs crypto wallet. The wallet is uniquely identifiable but is not used to make the transaction for the SMSF. It is done so that the auditor can easily trace payments, match up the trades, and make sure it was made for the owner’s benefit. So, the ATO has confirmed that it will accept the annual valuation valued on 30 June each year.
Sole Purpose Test
The other type of test is carried out to verify that the SMSF will solely provide members with a retirement benefit. This is done to confirm that the SMSF’s members are not receiving any current usefulness from the investment that they have made. With the cryptocurrency investment space growing exponentially over the last few years, recently, it has been on the downward curve. The ATO is clamping down on the rules, regulations, and tax obligations; therefore, you must follow all the rules and regulations.
Conclusion
Cryptocurrency can be a good way for SMSFs to build retirement funds. However, the risk involved is enormous because price volatility may hurt retirement funds.
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Disclaimer- This content should not be considered financial advice and is for educational or
informational purposes only.
