Hot Issues
spacer
Tools for budgeting, cash flow, Super and more ….
spacer
Statistics show SMSFs not just for the rich
spacer
SMSFs lose thousands in property, investment scams
spacer
The good, bad, and potentially ugly for SMSFs
spacer
What politicians use to tell you how Australia is going.
spacer
Estate planning in the new environment
spacer
ATO issues alert on super, tax scams
spacer
SMSFs: Our 'hardest' jobs
spacer
ASIC issues alert over big gaps in SMSF trustee knowledge
spacer
Super savings gap for women stuck at 30%
spacer
Statistics for all Australians
spacer
Super set to play bigger retirement role
spacer
Why SMSFs want estate-planning advice
spacer
The power of financial role models
spacer
Assess your retirement financial resources
spacer
Cryptocurrency audits tipped to increase this EOFY
spacer
Time to check your risk exposure?
spacer
Some general interest stats on SMSFs
spacer
Check trust deed to protect super in estate planning
spacer
Survey reveals strong opposition to retirement system changes
spacer
Australia by numbers – Update
spacer
Federal Budget 2018 – Overview
spacer
Your Budget
spacer
4 components of our 2018 Federal Budget
spacer
Tools to help you manage your financial position are available on our site.
spacer
New rules capture SMSFs trading big with cryptocurrency
spacer
Common EOFY slip-ups flagged for SMSFs
ATO issues update on cryptocurrency compliance traps

The ATO has provided further details on some of the regulatory considerations with cryptocurrency for SMSFs, including valuations, in specie contributions and ownership of assets.

         

 

Following some of its earlier comments around cryptocurrencies and SMSFs, the ATO has discussed some of the specific regulatory considerations for SMSF trustees and professionals with cryptocurrency in an online update.

The ATO explained that where an SMSF transacts in cryptocurrencies, SMSF trustees and members need to be aware of the tax consequences in each case, which will depend on the nature of the circumstances of the SMSF.


“SMSFs involved in acquiring or disposing of cryptocurrency must keep records in relation to their cryptocurrency transactions. There are also super regulatory considerations for SMSF trustees, members and SMSF auditors,” the ATO said.

Investment strategy and trust deed

While SMSFs are not prohibited from investing in cryptocurrencies, it said, the investment must be allowed under the fund’s trust deed, be in accordance with the fund’s investment strategy and comply with SISA and SISR regulatory requirements concerning investment restrictions.

Before investing in cryptocurrency, the ATO said SMSF trustees and members should consider the level of risk of the investment and review their fund’s investment strategy to ensure the investment being considered is permitted.

“Trustees and members also need to ensure that investments in cryptocurrency are allowed under the SMSF’s deed,” the update said.

Ownership and separation of assets

SMSF cryptocurrency investments must also be held and managed separately from the personal or business investments of trustees and members, the ATO added.

“This includes ensuring the SMSF has clear ownership of the cryptocurrency. This means the fund must maintain and be able to provide evidence of a separate cryptocurrency wallet for the SMSF from that used by trustees and members personally,” said the ATO.

Valuation

In terms of valuation, the ATO said SMSFs must ensure their investments in cryptocurrency are valued in accordance with ATO valuation guidelines.

“The value in Australian dollars will be the fair market value which can be obtained from a reputable digital currency exchange or website that publishes its rates publicly,” it said.

“The value of cryptocurrency can change constantly. For the purpose of calculating member balances at 30 June, the ATO will accept the 30 June closing value published on the website of a cryptocurrency exchange that reports on historical cryptocurrency values.”

Related-party transactions

The ATO also noted that cryptocurrencies such as bitcoin are not listed securities and therefore cannot be acquired from a related party.

“It follows that SMSF trustees and members – being related parties of the fund – cannot make in specie contributions or other transfers of cryptocurrency to the fund,” it said.

Sole-purpose test

The ATO also reminded SMSF professionals that an SMSF is unlikely to meet the sole-purpose test if trustees or members, directly or indirectly, obtain a financial benefit when making investment decisions and arrangements.

“For example, it may be a breach of the sole-purpose test where affiliate fees or commissions associated with the fund’s cryptocurrency investment are paid to a trustee or member personally,” it explained.

Pension or benefit payments

The ATO also confirmed that where a trustee or member satisfies a condition of release, the SMSF can make an in specie lump sum payment by way of transfer of cryptocurrency. However, pension payments must be made in cash.

“Trustees and members will need to consider the fund’s trust deed and any CGT implications associated with the transfer of assets such as cryptocurrency,” it said.

The ATO added that any SMSF trustees who think they may have breached the super laws “should work with their professional advisers to rectify the breach as soon as possible”.

 


By: Miranda Brownlee
19 MARCH 2018
www.smsfadviser.com

Pattinson Financial Services Pty Ltd ABN 17 121 851 376 is a Corporate Authorised Representative of Infocus Securities Australia Pty Ltd
ABN 47 097 797 049 AFSL and Australian Credit Licence No. 236523

Tel: +61 2 8850 6888 | Fax: +61 2 8850 6407 | Toll Free 1300 466 637 | PO Box 6253 Baulkham Hills BC NSW 2153

site By PlannerWeb