SMSF CRYPTO AND BITCOIN ACCOUNTING SERVICES [Step by Step Complete Guide]

By October 30, 2021 November 3rd, 2021 Blogs

The Australian Tax Office’s recent research suggests that the number of Australians investing in cryptocurrencies has surged since 2020 and is pandemic. In times of uncertainty, investors have traditionally flocked to gold, precious metals, and diamonds in the past. Since 2014, SMSF investors, according to ATO reports, have started investing in cryptocurrencies in their SMSF crypto and bitcoin accounting.

Cryptocurrencies are very volatile, a newly emerging sector, and very popular in an SMSF from the data due to three key factors.

The first is to diversify a portfolio away from traditional shares and property by investing in bitcoin and cryptocurrencies in an SMSF.

Secondly, given significant gains in cryptocurrency, a recent finder.com report stated that the average Australian investing in cryptocurrencies had achieved a 250% return over 12 months.

With large gains like this, the inevitable issue becomes cashing in your gains, where cryptocurrencies are treated as CGT assets for tax purposes and generally not taxable as income.

The recent trend of SMSFs investing crypto is also related to the benefits of zero 0% tax in the pension phase, where a Bitcoin holder sells their bitcoin and has no capital gains tax to pay up to the pension account limit of $1.6 million per person.

The third is, hedging against portfolio and market risks by investing in bitcoin, where traditionally SMSF investors would have used collectibles or alternate asset classes like gold and diamonds in a portfolio.

These three very telling reasons are why a large portion of investors are turning to SMSFs to add crypto to their portfolios, to gain higher returns than the average industry super fund, and to manage the risks of another GFC-like downturn.

So, why is it important to select an experienced and cost-effective SMSF crypto and bitcoin accounting provider like My SMSF?

Like crypto and bitcoin in an SMSF is a new type of asset, many traditional accountants and online providers tend to charge more and take longer to do crypto Smsf accounting work due to added complexities and a lack of familiarity. Further, most crypto exchanges add to the accounting complexity by providing statements that don’t accurately reflect valuation for SMSF crypto holdings.

What should you search for in an SMSF Crypto Accountant?

Well, we think you should ensure your accountant has

Experience:

My SMSF has over 5 years of experience.

Knowledge and expertise:

The tax treatment is different as the terms used and the trading and investing outcomes for crypto holders compared with shares.

Costs:

My SMSF has the lowest fees for SMSF crypto and bitcoin accounting services.

So, it is well worth checking that your SMSF crypto accountant has the knowledge, experience, and reasonable fees. Remember before you embark on Investing in SMSF crypto.

Make sure your SMSF Deed allows Investing, and you must make sure you update your investment strategy to reflect your crypto holdings.

The final point is to consider keeping your crypto SMSF investments simple so your SMSF crypto accounting does not get too complicated and costly.

FAQS:

Is it hard to set up an SMSF for crypto investing?

A self-managed super fund (SMSF) may be suitable for people that understand the requirements and are happy to make investment decisions to better their retirement savings.SMSFs will not suit everyone, however.

Can an SMSF invest in bitcoin and cryptocurrencies?

SMSFs are not restricted from investing in cryptocurrencies, providing that the investments are:

Not restricted under the trust deed of the SMSF. The crypto assets are reflected within the fund’s investment strategy, and that arm’s length and separation assets requirements under the super laws are met.

Can SMSF invest in cryptocurrencies?

Any cryptocurrency may be invested in by an SMSF, such as Bitcoin, Ethereum, or Litecoin. My SMSF suggests that SMSF crypto and bitcoin accounting members use specialist SMSF Crypto exchanges like Easy Crypto or Digital Surge or Swftx, for their crypto SMSF investment needs.

Summary:

Investing in Bitcoin or any other cryptocurrencies is not expressly prohibited for SMSF members. However, as previously stated, there are several compliance aspects to consider. Finally, a trustee must behave sensibly and in concert with the fund’s super laws and investment strategy.

SMSF crypto and bitcoin accounting members may wish to seek advice or conduct plenty of education and research before investing in Bitcoin to ensure they are informed on all compliance issues.

The ascent of digital currencies as real monetary speculation has made new difficulties for SMSF controllers and financial backers the same, who should now explore an unstable wilderness of high-hazard.

Australians have been investing bitcoin and cryptocurrencies in an SMSF since 2014. SMSF crypto accounting providers such as My SMSF can help you manage the complexity and costs of investing in crypto via an SMSF.

 

 

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