Setting Up a Self-Managed Super Fund (SMSF) for Cryptocurrency Investment
Setting up a Self-Managed Super Fund (SMSF) for cryptocurrency investments requires compliance with specific processes and costs. Below, we outline the steps, financial considerations, and best practices for ensuring regulatory and security compliance, with support from Grow services.
Key Steps to Establish an SMSF
Pre-Setup Requirements: - Complete our pre-flight checklist to identify any potential issues that may lead the Australian Tax Office (ATO) to decline your SMSF registration.
Ensure all members of the SMSF have obtained a Director ID, a mandatory requirement.
Initiating the SMSF Setup: - Use Grow’s online SMSF setup form to register the new SMSF. - Grow’s services include assistance in setting up SMSF accounts with selected Australian-based cryptocurrency exchanges.
Compliance and Finalisation: - Transfer funds from an existing super fund by following Grow's instructions on how to transfer to the SMSF.
- Grow helps ensure you adhere to ATO regulations, including investment strategy considerations and appropriate declarations regarding self-custody (where used).
Costs Associated with SMSF Setup and Maintenance
Setup Fee: $1,495* for an SMSF with a company trustee (recommended for crypto investors).
Ongoing Annual Fees: Starting from $1,485 per year, which includes the accounts, tax lodgement, independent audit and all technical support.
External Wallet Fees: An additional $220 annually if you store cryptocurrency in external wallets / self-custody.
*Discount may apply if a valid referral code is used.
Investment Discretion and Best Practices
As a trustee of your SMSF, you have full discretion to allocate your funds, including investing heavily in a single cryptocurrency like Bitcoin.
You're not forced to be diversified, but your investment strategy document must consider diversification (Grow's supplied initial investment strategy document does).
Understand that Grow, the independent auditor or the ATO cannot tell you whether your investment strategy and investment choices are appropriate:
You, as the trustee, determine what is appropriate for you as the member.Secure storage practices should be prioritised. Cold storage or hardware wallets are highly recommended for safeguarding your crypto assets. Grow supports the setup and management of such secure storage solutions.
By following these steps and recommendations, you can establish an SMSF that is well-equipped for cryptocurrency investment while adhering to Australian regulations.