SMSF Compliance Traps with Bitcoin and other Crypto Currencies


With bitcoin prices surging by 1,000% in the last 12 months, we are seeing a growing number of SMSF holders investing in the cryptocurrency. It is important that Auditors and Practitioners are aware of the compliance traps associated with bitcoin to ensure they manage their SMSF’s correctly.

Compliance Traps

  • Reg 4.09A Separation of assets

Any investment within the SMSF must show clear identification as being owned by the fund and be distinctly separated from any personal assets the trustee holds.

  • S66 Acquisition from related party

An unrelated party must be used to purchase bitcoin with cash only, as in specie contributions through bitcoin are not permitted.

  • Reg 4.09 Investment strategy

The trustee must reflect their decision to purchase bitcoin in their fund investment strategy, due to it being a high-risk investment.

It should also be noted that bitcoin is not listed as a collectable due to it not having a physical form. Therefore, it is advised that a separate asset class be created solely for cryptocurrency.

  • Trust deed

To invest in bitcoin, it is important to check the definition in the fund trust deed and ascertain whether the normal trust deed states outright if it allows or disallows this kind of investment.

How to audit bitcoin

Auditors have the ability to gain third party access to transactions, through such websites as https://blockexplorer.com. A list of transactions can be obtained in an Excel spreadsheet through the SMSF wallet to maintain the integrity of the account.

How Super Audits can help

It is a requirement for these funds to be audited annually by an accredited independent Super fund auditor. Super Audits work exclusively with Financial Planners, Accountants and Administrators who manage large numbers of SMSF’s. As a high-quality, low-cost auditor with a promise of fixed-fee quotes, this is a guarantee that sets Super Audits apart from its competitors.Contact them today for a quote.

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