The regulator says that with a growing number of SMSFs investing in crypto assets, there is an increased need for them to be aware of the potential risks, as it has seen trustees losing their crypto investments through theft, lost passwords, and impersonation schemes.
It has compiled a list of essential tips to help SMSF trustees safely navigate crypto investments to ensure they have enough protection to prevent any adverse events:
· Name the wallet correctly: Make sure the SMSF’s crypto wallet is registered in the name of the SMSF.
· Separate investments: Keep personal crypto investments separate from SMSF assets. Failing to do this can be a breach of the Superannuation Industry (Supervision) Act 1993.
· Always purchase and trade on reputable, well-established platforms. Check that they are a registered business or licensed by a relevant authority, look for independent reviews and user feedback, ensure the site uses secure HTTPS connections, and understand their policies, such as refunds and dispute resolution.
· Record all transactions, including purchases, sales, and transfers of crypto assets. Sales and transfers are classified as “disposals” and may result in capital gains tax (CGT). Keeping good records is essential for calculating CGT. Also, keep information about the wallet and any changes made to it.
· Protect the wallet password: Never share the wallet password with anyone. Store it securely to prevent unauthorised access to crypto assets.
· Avoid related party transactions: When transacting in crypto assets with related parties, all transactions must be done at arm’s length.
· Valuation records: Make sure you have proper market valuation records for your auditor.
Additionally, the ATO warned that trustees should also be cautious of impersonators posing as ATO representatives, claiming that trustees are involved in crypto tax evasion and asking for wallet details.
If trustees have concerns or suspect a scheme, visit SMSF schemes for more information.
Trustees can also visit Loss or theft of crypto assets to better understand the evidence needed to claim a capital loss if their crypto is lost or stolen.
The ASIC website also has information on how to spot crypto scams.
