Can I use my Super Fund to buy Cryptocurrency?
Super Funds are a popular investment vehicle in Australia due to their concessional tax rates (15% or lower). It is possible to buy crypto in a Super Fund but only in particular circumstances.
At this time there isnt any publicly available super fund in which you can invest in cryptocurrency although you may be able to select an ETF dedicated to crypto assets or crypto related businesses as part of your Fund. The only way to invest directly in cryptocurrency in your Super Fund is through a Self-Managed Super Fund (SMSF).
A self managed fund is one that you set up yourself but there are many rules and costs to consider. SMSF’s require annual Financial Statements, Tax Returns and an audit which make them a costly option for someone who doesnt have much in super. The higher your balance, the lower your percentage cost is for these costs, potentially making an SMSF a more viable option when compared to the administration costs of other Funds.
The other drawback of a SMSF is the responsibility. As a trustee of an SMSF you are required to follow the rules in the SIS Act and take responsibility for the management of the Fund. We can provide assistance with meeting these requirements.
In addition to the normal requirements of a SMSF, Cryptocurrency throws up some new challenges in meeting the requirements of the SIS Act. One of these is that you need to make sure your investment strategy and Trust Deed includes the ability to invest in cryptocurrency and that your strategy considers which investment classes you should be invested in to meet your retirement needs.
Another complication is proving that the cryptocurrency asset is held by the SMSF. All Super Fund assets must clearly be shown as being owned in the name of the Fund. If the SMSF’s cryptocurrency is held on an exchange, this requirement would be met as long as the account has been set up in the name of the Super Fund. Many Australian based Crypto exchanges provide the ability to set up an account in the name of an SMSF including Swftyx and CoinSpot. Overseas based exchanges should not be used as they dont support the Super Fund entity type which could lead to a breach of the SIS Act. If the Fund’s crypto is being held away from an exchange it is critical that it is held in it’s own seperately identifiable wallet and a deed of trust or similar document is required to confirm the Fund is the beneficial owner of the cryptocurrency.