Bitcoin and other cryptocurrencies have become increasingly popular over the past few years. As many keen investors jump on board, the ATO is reminding investors to be aware of the tax consequences.
Cryptocurrencies are classified as capital gains tax (CGT) assets, therefore, upon their disposal they may be subject to capital gains tax (CGT). For example, when you sell, trade or exchange your cryptocurrency, convert it to a fiat currency like Australian dollars, or use it to obtain goods or services.
If you acquire cryptocurrency as an investment, you will not be entitled to the personal use asset exemption. However, if you held the cryptocurrency for 12 months or more, you may be entitled to the CGT discount.
SMSFs
When an SMSF invests in a cryptocurrency, it must follow the same regulatory requirements that apply to investments in other assets. For example, super laws pertaining valuation, ownership and separation of assets, related party transactions, pension or benefit payments, sole-purpose test and voluntary disclosures apply to all cryptocurrency transactions.
An investment within a SMSF must:
* Be allowed under the trust deed
* Comply with SISA and SISR regulatory requirements
* Exist in accordance with the investment strategy of the fund
* Record keeping
It is essential to keep records of cryptocurrency transactions such as acquiring and disposing of a cryptocurrency, the date of transactions, the value of the cryptocurrency in Australian dollars at the time of the transaction, and what the transaction was for and who the other party was (even if it is their cryptocurrency address).
Call us for a complimentary, obligation-free honest conversation to discover the possibilities with your SMSF: (07) 3103 8551