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SMSFs, or Self-Managed Super Funds, are growing in popularity as an alternative to traditional retirement options, particularly for cryptocurrency. In Australia, there are over 600,000 SMSFs with a combined total of 1.15 million members (approximately 5% of the country).
As of the ATO’s 2024 report, SMSFs account for a staggering $1.02 trillion dollars, representing over a quarter of the $4.1 trillion dollars invested in all superannuations. With investors, institutions and governments beginning to embrace Bitcoin as a long-term investment, many Australians are searching for ways to expose their portfolio to BTC (and other digital assets) without paying exorbitant tax rates.
To accommodate these needs, Swyftx allows crypto enthusiasts to use our exchange and help add digital assets to retirement funds. SMSF-eligible investors can use the Swyftx exchange to make cryptocurrencies like Bitcoin a part of their SMSF portfolio.
Visit our cryptocurrency SMSF page to start investing your self managed super fund into Bitcoin, Ethereum, Solana, XRP and other digital assets.
Understanding crypto SMSFs
Technically, crypto SMSFs don’t exist. Rather, they are a vehicle that support adding digital assets to a retirement fund.
Specifically, Self-Managed Super Funds (SMSFs) are a type of retirement account that allows individuals or trustees to control their holdings and investment strategy. These funds typically come with unique tax characteristics. The Australian Tax Office (ATO) regulates SMSFs and ensures their compliance with tax laws.
SMSFs may have up to six members under an individual or corporate trustee structure. As a member of the fund, you and any fellow member are the fund’s trustees. Therefore, SMSFs with multiple members must be aligned in their investment vision and typically comprise family or close friends.
In an individual trustee structure, SMSF fund members are not allowed to be an employee of another fund member with the exception of relatives. The rules are a little more relaxed for corporate-style SMSFs.
For a long time, SMSFs were the only type of super fund that exposed investors to digital assets. However, the growing popularity of the crypto sector has seen some retail/public super funds add Bitcoin to their portfolios.
Nevertheless, an SMSF provides potential access to a wider range of digital assets than most managed funds.
Types of assets included in an SMSF
Unlike retail and industry supers, a Self-Managed Super Fund allows individuals to have more autonomy over the assets in their portfolio. Investment decisions are left up to the members of the fund, rather than an often unknown broker allocating funds on your behalf. As such, SMSF members are allowed the utmost freedom in choosing what they want in their investment, so long as it aligns with their documented Investment Strategy.
Assets that can be allocated to a Self-Managed Super Fund include:
- Cryptocurrencies and digital assets such as Bitcoin, Ethereum, XRP and many more
- Collectables such as fine wine and art
- Both listed and unlisted Australian and international shares
- Fixed-income products
- Commercial and residential property
- Any term or cash deposits
Why use an SMSF?
There are several benefits when it comes to SMSFs, such as tax rates and the variety of assets that can be included. However, crypto investments within an SMSF require careful management due to regulatory and compliance requirements and also cost money to maintain.
Profits from cryptocurrency not held in an SMSF are treated as capital gains assets meaning they can be taxed at income levels of up to 45% — without the discount that can come with using an SMSF. The table below shows how cryptocurrencies are taxed for typical investors.
| Income Level | Tax Owed on Income |
| $0 to $18,200 | Nothing |
| $18,201 to $45,000 | 16 cents for each $1 of total over $18,200 |
| $45,001 to $135,000 | $4,288 plus 30c for each $1 of total over $45,000 |
| $135,001 to $190,000 | $31,288 plus 37c for each $1 of total over $135,000 |
| $190,001 and over | $51,638 plus 45c for each $1 of total over $190,000 |
Generally, SMSFs can provide trustees with financial investment flexibility that retail and industry super funds cannot provide.
SMSF taxes and capital gains tax
SMSFs are eligible for a concessional tax rate of 15%, which is significantly lower than what many investors usually pay on cryptocurrencies per the standard Capital Gains Tax (CGT) rate. However, in order to qualify for the advantageous tax rate, the SMSF must comply with all ATO guidelines as well as other rules that we’ll discuss more in the section on regulation. Thorough records of crypto transactions must be maintained to manage such investments effectively and understand the associated tax implications.
Common types of SMSF income assessable for taxes include contributions, interest, capital gains (including from cryptocurrency), dividends and rent.
SMSF regulations
SMSFs must follow the tax laws outlined in the Superannuation Industry (Supervision) Act. SMSF investing requires strict adherence to these regulations to ensure compliance with Australian superannuation and tax laws.
Since the ATO oversees Self-Managed super funds, all cryptocurrency SMSF members should be aware of any existing ATO laws regarding both digital assets and superannuation. It is important to keep up-to-date on the regulatory requirements for cryptocurrencies and SMSFs.
Members must also be in compliance with SISA and SISR guidelines when forming their fund’s investment strategy.
SMSF compliance requirements for SMSF trustees
Once an SMSF is established, requirements include:
- Only remitting super benefit payments to members who have met release conditions
- Appointment of a registered auditor
- Submitting the fund’s annual return information to the ATO
- Paying annual taxes
- Accurate administrative reporting and record-keeping for items like a bank account
- Relevant information for tax returns for the year beginning 1 July and ending on 30 June are submitted on time unless an extension has been granted
- Accepting contributions only from other members in the fund
- Accurate reporting and record-keeping on cryptocurrencies based on market value at time of purchase
- Member insurance information is considered
Furthermore, the SMSF must be maintained solely for the purpose of retirement-funding. That means crypto assets in a SMSF cannot be used as part of a trading strategy.
The fund’s trust deed must also allow for the purchase of digital assets that are to be incorporated into the fund.
Sole purpose test
All SMSFs must comply with the sole purpose test to be eligible for the concessional 15% tax rate. The sole purpose test basically requires your funds to be maintained for the sole purpose of providing retirement benefits to your members — not benefiting your current lifestyle. This is because you’re (most likely) actively contributing to your SMSF below the pension age.
Passing the sole purpose test can get a little complicated for SMSFs when you consider these funds can invest in assets like vintage cars and fine art.Intentionally acquiring assets for immediate benefit, or other non-compliance with the sole purpose test will result in higher tax rates, as well as potential civil and criminal penalties for fund members. More information about the test can be found here.
Pros and cons of SMSFs
Pros
While SMSFs offer a favourable tax rate for complying funds, there are other potential benefits:
- Investing with friends and family: Sometimes investing can be scary when doing it alone. You are one person taking on a mountain of risk. Adding family members or friends not only mitigates the risk, but forms a community around the common goal of increasing your retirement funds.
- Adding cryptocurrency to your retirement plan: An SMSF is a great vehicle for including cryptocurrencies in your retirement portfolio.
Cons
Despite having several benefits, SMSFs still come with some drawbacks:
- Costs: There are often added costs associated with SMSFs compared to traditional super funds. Although these will change from one fund to the next, costs such as accounting, auditing, taxes, legal fees and financial advice can all add up.
- Complexity. SMSFs can be tricky as they come with a lot of legal red tape. You need to know what you’re doing in order to maximise your returns and minimise your chance of being hit with penalties for things like non-compliance.
- Liability: Even if you decide to use outside help — like a tax accountant or financial advisor — you and your fellow fund members are responsible for maintaining compliance. It doesn’t matter who helped you, at the end of the day, maintaining a Self-Managed Super Fund falls on the members.
- Status of fund and compliance: The compliance status of a fund may change if you switch away from a professionally managed fund, or if there are changes to a member’s health. Keep up to date with all of the correct information about your fellow fund members, as well as information put out by the ATO.
Barrier to entry: Most SMSF experts suggest it takes a super balance of at least $200k AUD before self-management becomes cost-effective.
How to invest in crypto assets through your SMSF
Setting up an SMSF requires planning and filling out and submitting several documents. An essential part of this process is establishing the SMSF’s investment strategy, which outlines investment goals and defines permissible investments, including cryptocurrency. It can be a good idea to seek professional help when getting a Self-Managed Super Fund up and running.
Once the ATO approves the fund, there are a few more steps required before you can begin adding digital assets to your retirement portfolio.
This can include:
- Open an account on the secure online portal
- Open a bank account
- Direct your super into your new SMSF
- Set up a new trading account (or ensure your current Swyftx account has Gold level verification)
- Set up data feeds
The SMSF will also need to include a trust deed. The trust deed of an SMSF includes the governing rules of the super fund and its trustees. The main job of the trust deed is to specifically list obligations, and define the terms and conditions of the trust.
Once everything is ready, you can create an SMSF account with Swyftx. This will require a few additional details, including a signed and dated Trust Deed. You can find out more via our support article.
SMSF account and asset management
When setting up a crypto SMSF, it’s crucial to choose a reputable digital currency exchange or broker that supports SMSFs. The exchange must comply with Australian regulations and provide a secure and reliable platform for trading and storing crypto assets. The SMSF must also have a separate wallet for storing crypto assets, and the fund’s trustees must ensure that the assets are held separately from personal assets.
There are many other considerations that SMSF trustees should make when creating an SMSF (or entity) account on a brokerage or exchange.
- Security measures. Keeping your assets safe is priority number one — so researching a platform’s history and reputation is vital. Swyftx has secured ISO 27001 certification, the industry-standard for information security.
- Trading fees. Especially when dealing with large lump sums in an SMSF, crypto trading fees can eat away at your retirement savings. Selecting an exchange with a competitive fee structure is an important consideration.
- Assets listed. While Bitcoin is the most popular digital asset, it’s far from the only one you can add to an SMSF. Those who wish to add a specific token to their retirement portfolios should ensure their SMSF trading platform supports it.
By carefully managing the SMSF’s crypto assets and ensuring compliance with all relevant regulations, trustees can take advantage of the potential benefits of including digital currencies in their retirement portfolios while minimising risks.
Is my cryptocurrency secure in a SMSF?
SMSFs are often storing a significant amount of funds (crypto or otherwise), so ensuring they are secure is a top priority.
Consider the following when it comes to your cryptocurrency wallet:
- Create a backup of your wallet key that can be stored offline, should you lose it.
- Investing in a hardware wallet can be a secure option for digital asset custody.
- Ensure that your password is unique and not the same password you use for other accounts (i.e. email).
Swyftx has a robust security framework to ensure the security of customer assets, alongside the highest standard of industry storage protocols.
Is it legal to have cryptocurrency in my SMSF?
Yes, it is 100% legal to include cryptocurrency in your retirement portfolio through an SMSF account. However, there are certain requirements investors must consider when adding digital assets to an SMSF, such as aligning with their Investment Strategy and accurately account reporting activity to the ATO.
Is investing in cryptocurrency through my SMSF right for me?
Only you (or a financial advisor) can ultimately answer this. Each individual must consider their unique financial circumstances to determine whether they will benefit from adding crypto to their SMSF. While no investment is without risk, Bitcoin and other cryptocurrencies present another alternative for diversifying your SMSF holdings.
Disclaimer: The information on Swyftx is for general educational purposes only and should not be taken as investment advice, personal recommendation, or an offer of, or solicitation to, buy or sell any assets. It has been prepared without regard to any particular investment objectives or financial situation and does not purport to cover any legal or regulatory requirements. Customers are encouraged to do their own independent research and seek professional advice. Swyftx makes no representation and assumes no liability as to the accuracy or completeness of the content. Any references to past performance are not, and should not be taken as a reliable indicator of future results. Make sure you understand the risks involved in trading before committing any capital. Never risk more than you are prepared to lose. Consider our Terms of Use and Risk Disclosure Statement for more details.
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