The requirement for assets to be held under the name of the super fund trustee under regulation 4.09A of the Superannuation Industry (Supervision) Regulations may be problematic for SMSFs looking to make a cryptocurrency investment, a specialist auditor has warned.
“A lot of the [cryptocurrency] ledgers [and exchanges] are based in the US and other countries, which means that they don’t have anything to do with self-managed superannuation funds. So investing using one of those ledgers [could make it] quite difficult proving that the coins are actually held by the super fund and not yourself personally,” Arum Advisory business services, SMSF audit and financing arrangements director Chris Ayling said during a Rivkin-hosted webinar.
“One of the big audit requirements is proof of ownership – having the asset owned by the superannuation fund. So if you have your coins on a ledger in your name, because it’s the only way it’s allowed you to do it, well that’s going to be a problem come audit time.”
According to Ayling, there are solutions at hand for SMSF trustees, but they require some specific actions.
“[To address this issue] you’re going to have to have either a document verifying [the coins] are held by you on trust for the super fund, or choose another ledger such as CoinSpot or other Australian-based ledgers that allow you to have the investment in the self-managed super fund,” he advised.
While he suggested a declaration of trust is a potential solution, he pointed out SMSF trustees should not use these documents as the compliance method of choice for cryptocurrency proof of ownership.
“It goes a long way towards getting an audit tick, but it’s not the be all and end all [solution]. So I will always tell someone who is considering investing in self-managed funds with Bitcoin is to use an Australian-based ledger,” he said.
“It solves a lot more problems as far as audit goes and might save you a lot of money in audit fees.”
According to Ayling, to date the issue has not caused too much concern as few SMSFs currently hold cryptocurrency assets.
