The fragility and instability of cryptocurrency could pose issues from a valuations perspective, which is an item of concern for the ATO, deputy commissioner James O’Halloran told SMSF Adviser.
Identifying and segregating the ownership of cryptocurrency could also be problematic if it’s held in an SMSF, Mr O’Halloran said.
“We will provide more guidance where we can, but I’m not sure there’s any difference here, from a regulatory point of view, with the sort of prudence and due diligence that should be applied when investing in a new asset,” Mr O’Halloran said.
Broadly, there is concern from industry that clients don’t understand the capital gains tax (CGT) implications of investing in cryptocurrency. When cryptocurrency is held in an SMSF, there is an added layer of complexity with compliance, Mr O’Halloran said.
“The nature of bitcoin and other cryptocurrencies may mean that compliance with the regulatory rules and restrictions that apply to SMSF investments is more difficult – for example, the regulatory requirement that the fund’s assets are managed separately from the member’s personal and business assets and ensuring that the SMSF has clear legal ownership of the bitcoin or relevant cryptocurrency, as well ensuring that the investment is appropriately valued for both accounting and tax purposes,” Mr O’Halloran said in his address at the SMSF Association’s national conference in Sydney this afternoon.
The tax office has had a spike in enquiries about cryptocurrency and SMSFs in recent months, which parallels the feedback of SMSF professionals who have noted a significant jump in interest from their client bases.
katarina.taurian@momentummedia.com.au
Crypto is the current fad.
Yes I have had discussions with clients, but none have invested.
The major of SMSF trustees are long term investors not interested in short term high risk investments
I expect there is more talk than action in the current crptocurrency pump & dump scam.