An industry lawyer has clarified one of the compliance issues often used to eliminate the possibility of an SMSF including an investment in digital assets, that of having to hold an asset in the fund’s name, as there is no requirement in the superannuation legislation and regulations to do so.
“A common issue is can the SMSF itself be registered [for the ownership of digital assets]. Some of these [items] do not [recognise] trust ownership [and] you can only register [them] in the name of a human or a company,” Sladen Legal principal Phil Broderick told delegates at the Chartered Accountants Australia and New Zealand National SMSF and Financial Advice Conference 2022 held in Sydney last week.
“This does raise the issue that comes around a lot, misunderstood to some extent, that assets have to be registered in the name of the SMSF.”
Broderick pointed out this is not actually a requirement under the Superannuation Industry (Supervision) (SIS) Act or Regulations and is a condition not specified in regulation 4.09A as many practitioners believe.
“People often misquote SIS regulation 4.09A, [but] if you read [regulation] 4.09A, it’s the prohibition against [the] intermingling [of assets],” he noted.
“It just says you the trustee cannot intermingle your own personal digital assets with those of the SMSF. It doesn’t actually require the assets to be registered in the name of the SMSF.”
According to Broderick, the country or origin of the digital assets can be the element leading to these concerns for many practitioners.
“So in this situation where you’ve got all of these digital assets, most of them not created in Australia in jurisdictions that don’t really contemplate trusts, there is no way to record they are held on trust,” he noted.
“[It means] you might need to have some other document showing the trust relationship, so some sort of acknowledgement a trust or whatever the registered entity is holds [the digital asset] as trustee of the SMSF.”
