SMSF – Self Managed Super Fund

Investing your superannuation funds into Bitcoin is another method of investing. This is attractive due to the taxation benefits provided, with the caveat that it is only accessible once you reach the preservation age. You can set up an SMSF using an accountant of your choice – we recommend using an accountant that understands cryptocurrencies. Note that for any investment in cryptocurrencies to be allowed, it must be specifically enabled and included in the SMSF trust deed. On top of this, any trustees to the fund must update their strategy document to include cryptocurrencies. Once your SMSF is setup you will get an SMSF bank account and your existing superannuation funds can be transferred into this bank account. Next you need to create a Super Fund account with Independent Reserve. This will require personal verification documents as well as uploading your SMSF trust deed and various other details pertaining to the fund entity. Once verified, you may transfer money to your Independent Reserve account and buy Bitcoin. SMSFs require an annual audit to remain compliant, Independent Reserve provides an order history report which you can generate for this purpose.

Other things to consider with SMSFs

There are many rules and regulations governing requirements around SMSFs. Some of these include:

  • The investment strategy Your SMSF investment strategy must consider diversification, liquidity (how easily you can convert Bitcoin to cash), ability to pay (when the funds are realised), insurance, etc
  • The sole purpose test All SMSFs in Australia must pass the sole purpose test, which requires the SMSF funds to only be generating income that benefits the SMSF fund itself directly. No one (including trustees) can obtain a direct financial benefit when making investment decisions with fund money.
  • Cryptocurrency specific concepts It is important to understand certain concepts when it comes to Bitcoin and cryptocurrencies. They are an intangible asset created through mathematical constructs that people give value to for no other reason than they believe others will also. While intangible, ownership can still be attributed. It is important that your cryptocurrency exchange directly supports SMSFs and allows you to enter various details such as the fund name and trustee information. Independent Reserve was the first Australian exchange to do this, and as such is fully aware of compliance requirements surrounding SMSFs.
  • Storage One of the benefits of cryptocurrency is the ability to easily send funds anywhere in the world. People will often withdraw their cryptocurrency from an exchange to a personal wallet. Independent Reserve also provides this functionality, but you should be aware that it can add further complications to SMSF audit processes as the location of all your funds needs to be accounted for. Independent Reserve recommends that if you decide to transfer your cryptocurrency off our platform, you minimise the number of wallets you send it to, and keep detailed records of where it is.

To open your SMSF trading account with Independent Reserve, simply create an account. You will be required to provide:

  • SMSF name
  • SMSF trust deed
  • SMSF ABN
  • SMSF trustee information, including ACN director/beneficial owner information if a corporate trustee.
  • Standard personal verification documents