CRYPTOCURRENCIES WITH YOUR SUPER

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1 INVESTING IN CRYPTOCURRENCIES WITH YOUR SUPER W H A T ' S I N T H I S G U I D E Buying Storing Audits Risks Having a Squirrel SMSF is all about having full financial control. You can invest your super exactly the way you want to, because of this, a number of our customers have switched to Squirrel to diversify their investment portfolios with cryptocurrencies. Firstly, it is important to recognise that Bitcoin and cryptocurrencies in general are a relatively new investment. It is extremely important to take extra precautions to ensure full compliance with superannuation regulations. Squirrel Says We re always on hand to make sure you re being compliant with the ATO, but at the moment, in the absence of ATO guidance on cryptocurrencies, there are many risks you ll need to consider.

2 Buying your cryptocurrency Buying cryptocurrencies as an SMSF investment is different from investing in them for personal use. Firstly, you need to buy them from exchanges that cater specifically for SMSF accounts. The Independent Reserve and Coinspot are two exchanges that cater for SMSFs When purchasing please ensure: The Bitcoin or cryptocurrency assets are purchased in the name of your SMSF, NOT in your personal name/account. Check your SMSF deed and investment strategy allow for the investment in cryptocurrency Be certain to purchase your cryptocurrency from an exchange that has experience in SMSF investing, one that will allow you to set up an account in your SMSFs name

3 Storing your cryptocurrency To safeguard against hacking, we HIGHLY recommend that if you're buying and holding cryptocurrencies that you store them in a cold/hardware wallet such as a Trezor or Ledger Nano S. Make sure you store your bitcoins in a secure, safe and insured independent location Your cryptocurrency must be held in a wallet also owned by your self-managed super fund, it cannot be stored with your personal Bitcoin/Cryptocurrencies Be certain to store your cryptocurrency with a provider that has experience in storing SMSF cryptocurrencies. There must be a strong audit trail for SMSF compliance.

4 Auditing and staying compliant Every year your SMSF must be audited before you lodge a tax return. The Auditor will need to cite evidence that verifies the cryptocurrency holdings, the purchases and transfers, and confirmation that the SMSF owns all the cryptocurrencies in your portfolio. This will include: Transaction statement from your chosen exchange Screenshot of your wallet for proof of storage Your SMSF wallet address details The public key of your SMSF wallet By law, SMSFs are heavily regulated by the ATO and there are a number of restrictions in place to ensure that all investments satisfy the sole purpose test - that SMSFs are operating solely for the purpose of providing funds for retirement and do not provide the trustees with any present-day benefits.

5 The risks of investing in cryptocurrencies As well as being extremely volatile and unregulated, ASIC has listed the following risks on their website: Lack of safeguards The exchange platforms on which you buy and sell virtual currencies are generally not regulated, which means that if the platform fails or is hacked, you are not protected and have no statutory recourse Values fluctuate The value of a virtual currency can fluctuate wildly. The value is largely based on its popularity at a given time which will be influenced by factors such as the number of people using the currency and the ease with which it can be traded or used Your money could be stolen Just as your real wallet can be stolen by a thief, the contents of your digital wallet can be stolen by a computer hacker. Be sure to research an appropriate way to store your cryptocurrency Popular with fraud Many feel that the anonymity of cryptocurrency may provide an avenue for early release of super into a personal account. This is not the case, it will be up to you to prove where your cryptocurrency is at all times, any transfers to personal accounts will be considered a breach and fines will apply accordingly

6 Getting Help with Your SMSF Cryptocurrency Investments Got a burning question? You can reach us in the following ways: Cryptocurrencies are a brand new asset class and there is no doubt that they will become an everincreasing investment channel for many people around the world - not just SMSFs. Our team have experience in cryptocurrency investing, market trading and exchanges and are always on hand to guide you if you need general advice on cryptocurrencies and SMSFs squirrelsuper.com.au