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SMSFs and Crypto


The Australian Tax Office (ATO) has put out a recent warning to SMSF trustees about thinking of investing in crypto and on some of the ways crypto can be lost. The Tax Office has advised of seeing increased reports of losses.


According to the ATO, SMSF trustees are reporting losses from crypto investments due to scams and other reasons. Some of these crypto scams have been caused where trustees were conned into investing their superannuation benefits in a fake crypto exchange.


In other cases, the ATO indicated the losses are due to theft, where fraudsters have hacked into trustees’ crypto accounts to steal all their crypto. Other problems have occurred with lost passwords resulting in SMSF trustees being locked out of their crypto account and unable to access their crypto.


Importantly, many crypto assets are not considered to be financial products which  means the platform where you buy and sell crypto is usually not regulated  and therefore you may not be protected if the platform fails or is hacked and lose all of your crypto investment.


The ATO did advise that in cases where the trustee has lost access to the crypto it may be possible to claim a capital loss if you lose your crypto private key or your crypto is stolen. To claim a capital loss, you must be able to provide evidence of when you acquired and lost the private key, the wallet address that the private key relates to, the cost incurred to acquire the lost or stolen crypto, the amount of crypto in the wallet at the time of the loss, that the wallet was controlled by you.


Superannuation is for your retirement and considerable care should occur in investing for your long -term future. Therefore, unless you fully understand how crypto works and the potential for losses, it is our view to be very careful and avoid the risk.


For those SMSF trustees' that understand crypto and the risks, we are pleased to advise that we provide SMSF administration & tax services for clients who invest in Crypto via one of our preferred exchanges - these include Coinspot, Coinjar, BTC Markets, Digital Surge, Coinstash, Independent Reserve and Swyftx. If you have an SMSF or considering establishing an SMSF and wanting to invest in Crypto, please don't hesitate to contact us.

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