SMSF and Investing Super in Cryptocurrency
Invest in cryptocurrencies like Bitcoin, Ethereum, Ripple XRP, and others; securely with a best-in-class offering catered to Self Managed Super Fund (SMSF) accounts. Managed by Independent Reserve, a trusted Australian orderbook exchange established in 2013.
Opening an account
Opening an SMSF account with Independent Reserve is easy! Simply create an account, and choose "Super Fund" as the account type. You will then be led through the process to complete the sign-up and verification. Documents required to create an account include:
- SMSF name
- SMSF trust deed document
- SMSF ABN
- SMSF trustee information, including ACN and director/beneficial owner information if a corporate trustee.
- Standard personal verification documents
How to invest in bitcoin and other cryptocurrencies with an SMSF
More Australians are choosing to invest in Bitcoin and other cryptocurrencies with a Self Managed Super Fund (SMSF). 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.
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.
Tax Statement – Powered by KPMG
The Crypto Tax Estimator developed by KPMG is a digital tool that plugs directly into
Independent Reserve’s user interface, allowing traders to estimate tax obligations on their
portfolio all with just the click of a button. Users are provided with an estimate of their potential tax exposure in
real-time, based on the users’ buy/sell transactions on the exchange.
First bespoke API to plug directly into a crypto exchange that is backed by a global professional services firm.
Sample Tax Statement is available for download here