Self-managed super funds (SMSFs) are a popular way for Australians to save for retirement. However, there are a number of tax implications to consider when investing in cryptocurrencies through an SMSF.
*A professional adviser should be consulted to gain an accurate information of the current taxation implications. The following is based on the research we have conducted and may not be accurate.
Cryptocurrencies as CGT assets
For tax purposes, cryptocurrencies are considered capital gains tax (CGT) assets. This means that when an SMSF sells a cryptocurrency, it will be liable for CGT on any capital gain. The CGT rate for SMSFs is 15% for assets held for less than 12 months, and 10% for assets held for more than 12 months.
Examples of CGT implications
- Purchased and sold within the same year: If an SMSF purchases a cryptocurrency and then sells it within the same financial year, it will be liable for CGT at the short-term rate of 15%. For example, if an SMSF purchases 1 Bitcoin for $50,000 and then sells it for $60,000 within the same financial year, it will have a capital gain of $10,000. The SMSF will be liable for CGT of $1,500 on this gain.
- Held for more than one year: If an SMSF holds a cryptocurrency for more than one year, it will be liable for CGT at the long-term rate of 10%. For example, if an SMSF purchases 1 Bitcoin for $50,000 and then sells it for $60,000 after holding it for more than one year, it will have a capital gain of $10,000. The SMSF will be liable for CGT of $1,000 on this gain.
Other tax implications
- Mining cryptocurrencies: If an SMSF mines cryptocurrencies, it will be liable for CGT on any capital gains that arise from the sale of the mined cryptocurrencies. The CGT rate will depend on how long the cryptocurrencies are held.
- Gifting cryptocurrencies: If an SMSF gifts cryptocurrencies to a member, the member will be liable for CGT on any capital gains that arise from the sale of the gifted cryptocurrencies. The CGT rate will depend on how long the cryptocurrencies were held by the SMSF.
The tax implications of investing in cryptocurrencies through an SMSF can be complex. SMSF trustees and members should seek independent professional advice before making any investment decisions.
Sources:
Australian Taxation Office: SMSF investing in crypto assets: https://www.ato.gov.au/super/self-managed-super-funds/in-detail/smsf-investing/smsf-investing-in-crypto-assets/
SuperGuide: SMSFs and cryptocurrency investments: https://www.superguide.com.au/smsfs/cryptocurrency-investments
TurboTax: Your Crypto Tax Guide: https://turbotax.intuit.com/tax-tips/investments-and-taxes/your-cryptocurrency-tax-guide/L4k3xiFjB
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial advice. Cryptocurrency investments and security measures involve inherent risks, and readers are urged to conduct their research and seek professional advice before making any investment decisions. The author and publisher of this article disclaim any liability for any financial losses or damages incurred directly or indirectly from the use of the information provided herein.
