Gold, Silver & Bitcoin
If you are more adventurous with your investments
If you are more adventurous with your investments
When an SMSF member is considering investing in gold or other precious metals, they need to consider whether the investment could fall within the definition of collectables and personal use assets.
A gold investment could be in gold bullion, gold coins, or gold ingots.
Gold bullion is a recognised weight and fineness of gold that can be purchased for the current price of gold, plus the small percentage costs incurred in refining, fabricating, and shipping the bullion to the purchaser. The word “bullion” means a refined and stamped weight of precious metal. Most people think of it as large gold bricks or gold bars.
Gold ingots are also sometimes referred to as gold bars, but they are formed differently than the minted bars. With ingots the weight contained can vary as these bars are poured instead of stamped. They are usually thicker than the stamped bars.
Gold coins can be found in two different types. Those valued for the bullion amount (i.e. bullion coins) or those with historical value which are often rare, called numismatic coins.
Numismatic coins are treated as collectables. Bullion coins are collectables if their value exceeds their face value and they are traded at a price above the spot price of their metal content. However, gold bullion or gold ingots are not treated as collectables or personal use assets.
In essence, an SMSF can invest in gold as long as it is not acquired from a related party. The key issues to consider when an SMSF buys gold bullion bars or gold ingots are:
Bitcoin has become fairly common investment these days and we get asked often whether SMSF can invest in bitcoin as well.
While SMSFs are not prohibited from investing in cryptocurrencies, the investment must:
There are few things to consider:
Cryptocurrencies, such as bitcoin, are CGT assets and SMSFs may acquire, dispose of or invest in these as they would in any other asset. When an SMSF engages in these transactions it must comply with the same regulatory requirements that apply to investments in other assets.
An SMSF’s investment strategy outlines its investment objectives and specifies the types of investments it can make. Before investing in cryptocurrency, SMSF trustees and members should consider the level of risk of the investment. Trustees and members may then review and if necessary, update their fund’s investment strategy to ensure the investment being considered is permitted.
Trustees and members also need to ensure that investments in cryptocurrency are allowed under the SMSF’s deed.
The super laws require trustees and members to ensure their fund’s assets are held separately from personal assets. An SMSF’s cryptocurrency investments must be held and managed separately from the personal or business investments of trustees and members. This includes ensuring the SMSF has clear ownership of the cryptocurrency. This means the fund must maintain and be able to provide evidence of a separate cryptocurrency wallet for the SMSF from that used by trustees and members personally.
SMSFs must ensure their investments in cryptocurrency are valued in accordance with ATO valuation guidelines. The value in Australian dollars will be the fair market value which can be obtained from a reputable digital currency exchange or website that publishes its rates publicly.
The value of cryptocurrency can change constantly. For the purpose of calculating member balances at 30 June, the ATO will accept the 30 June closing value published on the website of a cryptocurrency exchange that reports on historical cryptocurrency values.
For the purpose of calculating member balances at 30 June, the ATO will accept the 30 June closing value published on the website of a cryptocurrency exchange that reports on historical cryptocurrency values.
You will need a secure digital wallet – like a bank account in the crypto world. You will also need an account with a crypto exchange, the crypto equivalent of an online broking account.
This MUST be separate from your personal investing.
Cryptocurrencies are also regarded as an asset for capital gains tax (CGT) purposes. If your fund makes a capital gain when selling a cryptocurrency, you may have a CGT obligation.
Where a trustee or member satisfies a condition of release, the SMSF can make an in specie lump sum payment by way of transfer of cryptocurrency. However, pension payments must be made in cash.
Trustees and members will need to consider the fund’s trust deed and any CGT implications associated with the transfer of assets such as cryptocurrency.
