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Cryptocurrency in SMSFs
Invest and trade crypto through your Self-Managed Super Fund.
Already have an established SMSF?
If you already have an SMSF and want to create a Swyftx account, follow the steps in our help article to set up an SMSF account.
Don’t have an existing SMSF?
If you don’t have an established SMSF setup already, we may be able to help! Book a free 30-minute consultation call with one of our dedicated account specialists today.
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An overview of crypto investing as a SMSF
Australia allows individuals to include cryptocurrencies as part of their superannuation strategy via a Self-Managed Super Fund. A key function of an SMSF is to provide retirement benefits to its members. SMSFs are a popular choice for those looking to include Bitcoin and other digital assets in their retirement portfolios.
Legality of crypto SMSFs
The ATO’s stance is that Bitcoin and other cryptocurrencies are not money, but rather capital gains tax (CGT) assets. This means SMSF investors must keep a full record whenever they buy, sell or trade cryptocurrency so that it can be reviewed and taxed appropriately.
Alternative assets
An SMSF typically allows individuals more autonomy over their investment strategy and asset selection compared to retail and industry super funds. Alternative assets that can be allocated to an SMSF include cryptocurrency, gold, diamonds, racing horses, yachts, private equity and collectables such as wine and art.
Associated regulations
In order to be compliant, funds must follow the requirements of the Superannuation Industry (Supervision) Act by the ATO. All fund trustees should be aware of any changes to the law, as fund trustees are responsible for ensuring compliance, even if they receive professional assistance. It is crucial to properly manage and report SMSF crypto assets to comply with regulatory requirements, ensuring accurate tracking of crypto activity.
Current tax rate for crypto SMSFs in Australia
One of the largest benefits of an SMSF is the low concessional tax rate of 15%. Long-term capital gains enjoy an effective tax rate of 10%. As many will notice, this tax rate is much lower than typical marginal tax rates for individuals. However, to be entitled to that tax rate, your SMSF must be classified as a complying fund. A non-complying super fund will have the highest marginal tax rate.
Summary of cryptocurrency within a self-managed super fund
According to the Australia Tax Office (ATO), SMSFs are a type of retirement savings fund. Compared to other types of funds, SMSF members also serve as its trustees. As such, SMSF trustees must ensure compliance with the relevant super and tax laws. SMSF tax benefits make the investment vehicle a popular choice for cryptocurrency holders.
How to set up a crypto SMSF account
01
Apply for SMSF account
You can apply for an SMSF account through your personal account in the Swyftx app.
02
Submit information
Submit the required information and documents relating to your SMSF.
03
Process application
Once you’ve submitted your SMSF documents, Swyftx will process your application.
Risks of crypto SMSFs
Information you may wish to consider prior to investing with a SMSF.
Risks
Since fund trustees are responsible for all fund decisions and compliance, risks are weighted heavier on the trustees. The risks of cryptocurrency SMSFs include low or negative returns, and assumption of full responsibility even through major life changes (e.g. losing your house or job).
If you lose money through theft or fraud, you won’t have access to any special compensation schemes or the Superannuation Complaints Tribunal.
Trustees should also consider continuity of the SMSF in the event of death, relationship breakdown or incapacity.
Sole purpose tests
The sole purpose test is one of the legislative requirements for any SMSF. The sole purpose test requires that cryptocurrency SMSF funds can only be maintained for the sole purpose of providing fund members with death or retirement benefits. For example, if you have a piece of art in your fund, the art piece cannot be displayed at an SMSF member’s house.
Associated costs
A common consideration about cryptocurrency self-managed super funds is the high number of ongoing costs that may be required for fund maintenance. According to MoneySmart, some of the costs for maintaining a cryptocurrency SMSF include:
- Investment fees
- Legal Services
- Accounting fees
- Financial Advice
- Audit fees
- ATO supervisory levy
- Tax services
Many SMSF providers offer a fixed fee service that covers the required compliance costs.
Can you invest your superannuation into Bitcoin?
Yes. You can roll over your super balance from a pre-existing superfund into your cryptocurrency Self-Managed Super Fund (SMSF).
What are the associated regulations with SMSF investing in cryptocurrencies?
In Australia, a Self-Managed Super Fund must adhere to super and tax laws, the most critical being the Superannuation Industry (Supervision) Act. The Australian Tax Office (ATO) is the regulator for SMSFs and the SMSF trustees are responsible for ensuring that their Crypto SMSF is compliant. For more information and to find out if your Crypto SMSF is compliant, visit the Australian Government’s official Superfund website.
Is my money safe with Swyftx?
At Swyftx, protecting our customer’s assets is our top priority. We have implemented a robust security framework to ensure that our customers can trade and store their cryptocurrency in a safe environment. We use the highest standard of industry storage protocols. Learn more about Swyftx’s security protocols and procedures. Additionally, once users have successfully purchased an asset, they can easily withdraw that asset to an external wallet.
Am I able to deposit SMSF funds into my personal account?
No, under no circumstance can you deposit SMSF funds into your personal Swyftx account. There are legal implications and tax consequences that can arise from intertwining SMSF assets with personal assets.
What documents do I need to submit?
You can find relevant information on what you’re required to submit for an SMSF crypto account with Swyftx in our Support article Set up a self-managed super fund (SMSF) account. Alternatively, you can book a consult with one of our account specialists via the form below to get you started.
How can I set up an SMSF?
After you fill out a form with a cryptocurrency SMSF service provider, the SMSF trustees will have to wait for approval from the ATO.
Once the ATO approves the SMSF, there are additional steps that trustees will have to take such as opening an account on a secure portal, opening a bank account for the SMSF, rolling over your super balance into your new SMSF, setting up a new crypto trading account for the SMSF and setting up data feeds.
The trust deed is also a crucial part of the SMSF process. The trust deed is a document that contains the rules through which an SMSF is governed. The fund’s trust deed also includes obligations, terms, and conditions of the trust.
How much does it cost to set up an SMSF?
The cost of setting up a crypto Self-Managed Super Fund can vary significantly depending on your personal circumstances and goals. Generally, when using one of Swyftx’s providers, setup costs range from $999 to $2,200* AUD. Book a free consult with our SMSF team to find out more.
Additionally, it’s important to consider the ongoing costs associated with maintaining an SMSF, which can include various out-of-pocket expenses.
*For SMSF set up including corporate trustee. Bare trust set ups are excluded.
Can I keep my crypto SMSF in cold storage?
Yes, crypto held within an SMSF structure can be stored in a hardware wallet like the Ledger Nano. This is often the preferred option for longer-term holdings. However, it’s worth noting the wallet must exclusively be used for your SMSF – you cannot store any of your personal portfolio on the device. The storage arrangement must be disclosed, too.