Key considerations for SMSF and crypto investments

Investing in cryptocurrency through an SMSF presents unique opportunities, but it also comes with critical responsibilities that require meticulous attention. For example, the intangible nature of cryptocurrencies accentuates the importance of maintaining precise records. This step is often overlooked, yet it’s a step that can result in a comprehensive audit. 


So, what measures should SMSF trustees take to preempt potential issues down the road? 


Understanding SMSF trustee & member responsibilities. 


An SMSF's investment strategy covers the objectives and types of investments it can venture into. Before diving into the world of crypto assets, trustees and members should assess the risks. If needed, they should revise the fund's investment strategy to ensure compliance with the contemplated investment. 


Prior to acquiring cryptocurrencies, trustees should review the investment provisions detailed in the SMSF's trust deed to ensure it’s an approved investment. If it’s not, they might like to amend the trust deed to include cryptocurrency investments. 


Acquiring cryptocurrency. 


To acquire cryptocurrency, an SMSF must establish a trading or exchange account with an external platform in the fund's name. A thorough due diligence assessment of the chosen exchange is essential to ensure proper account setup and that trustees comprehend the ensuing reports. Notable platforms for trading include Swyftx and CoinSpot. 


Maintaining asset separation. 


Clear separating assets is essential. Crypto investments must be meticulously managed independently from the personal or business matters of trustees and members. A digital wallet should exclusively house the SMSF's crypto assets. Popular and trusted options include Capital, eToro, Trezor Model One, and Ledger Nano X. 


Cryptocurrency records required for auditing. 


  • Auditors will necessitate a comprehensive set of records for cryptocurrency investments, including: 
  • Transaction receipts with purchase, transfer, or disposal dates. 
  • A record of each transaction date. 
  • Transaction purposes and counterparty information (e.g., crypto asset addresses). 
  • Exchange records. 
  • Valuation of crypto assets in Australian dollars at each transaction's time. 
  • Documentation of agent, accountant, and legal expenses. 
  • Digital wallet records and keys. 
  • Software costs related to tax management, such as digital wallets. 


Other details you need to know. 


Each crypto asset should be detailed separately, as they are distinct Capital Gains Tax (CGT) assets. Additionally, an annual trustee declaration is mandatory to verify ownership. 


In financial reporting, digital assets must be categorised as "Digital Assets / Crypto / Crypto Currency / Other Asset." However, if the digital investment holds substantial significance, it warrants specific disclosure. 


Finally, for tax purposes, it's essential to recognise that crypto assets are not considered currency, but CGT assets. Therefore, any regular income derived from crypto — such as token rewards — must be declared as “other income” in the SMSF tax return. 


The ATO's vigilance 


The Australian Taxation Office (ATO) has been monitoring cryptocurrency since 2019 through a data-matching program focusing on crypto transactions. This initiative enables the ATO to access data from Designated Service Providers (DSPs) to identify crypto buyers and sellers and quantify their transactions. It then cross-references this data with its own records to detect individuals failing to meet their registration, reporting, submission, and payment obligations. 


Here’s what your SMSF auditor must be able to review: 


  1. Compliance with the SMSF's investment strategy for cryptocurrency investments. 
  2. Adherence to SIS act and trust deed provisions governing the investment. 
  3. Proper registration of the digital wallet in the fund's name. 
  4. Reconciliation of end-of-year balance with holding statements. 
  5. Submission of a detailed transaction listing for review. 
  6. Accuracy of cryptocurrency valuations converted to Australian dollars. 
  7. Correct asset classification as Digital Assets / Crypto / Crypto Currency / Other Asset. 
  8. Receipt of an Annual Trustee Declaration. 


Confused? You’re not alone. 


The SMSF and cryptocurrency worlds are already complicated enough — it’s no wonder so many people feel overwhelmed when these worlds collide. 


One thing is certain: meticulous compliance and record-keeping is paramount, and Ascent Accountants are ready to help. We can also refer you to a trusted financial advisor or other expert in the cryptocurrency SMSF space who can continue to support you. Don't hesitate — reach out to us today and let's embark on this cryptocurrency adventure together! 

Need help with your accounting?

Find Out What We Do

June 30 Checklist for Business Owners

June 12, 2025
June is zooming by! Here’s another handy checklist for business owners—let’s get you sorted for EOFY and tick off those to-dos.

Our EOFY Guide for Taxpayers.

June 12, 2025
EOFY is almost here. Are you ready? Now’s the time to get your finances in order and maximise your tax return. Our latest guide covers top tax deductions, super contributions & co-contributions, SMSF must-dos, PAYG instalment tips and a 30 June checklist.

Maximise Your Rental Property Tax Deductions this EOFY

June 12, 2025
Whether you're a first-time landlord or managing multiple properties, understanding what you can claim at tax time can make a big difference to your bottom line. In our latest blog, we break down the most common (and often overlooked) deductions.

What is a Bridging Loan? And When Would You Need One?

May 12, 2025
Buying and selling property rarely lines up perfectly. The logistics of it all can be incredibly stressful. If you’ve found the perfect next home but haven’t sold your current one yet, a bridging loan can make your move easier, without having to wait on your current property sale.  What is a bridging loan? A bridging loan is a short-term loan that gives you the funds to buy a new property before your current property has sold. It’s designed to bridge the gap between buying and selling. These loans are generally interest-only and are typically offered for up to 12 months, giving you time to sell and settle on your current home while already owning the next one. When would I need a bridging loan? You might consider bridging finance if: You’ve found your next home but haven’t yet sold your current one. You want to avoid renting or moving twice between sales. You want more time to prepare your home for market to get the best sale price. You're building a new home while still living in your existing one. How does it work? Peak Debt: The lender combines your current mortgage, the cost of the new property (including stamp duty and legal fees), and any interest (if it’s being capitalised). This total is known as your Peak Debt. Interest Only: During the bridging period, you’ll typically pay interest only — or the interest may be capitalised (meaning it’s added to your loan rather than paid upfront). Sell Your Property: Once you sell your existing home, the sale proceeds are used to reduce your Peak Debt. End Debt: The remaining balance becomes your End Debt, which then continues as a standard mortgage. An example of a bridging loan. Your current home loan = $200,000 New home = $800,000 Total bridging loan (Peak Debt) = $1,000,000 After selling your home for $600,000, that amount is used to pay down your loan Remaining loan (End Debt) = $400,000 Things to consider. Like any major financial decision, it’s important to understand all the moving parts before you commit. Time pressure: You typically have 6–12 months to sell. If you don’t sell in time, the lender may step in to sell the property and/or charge default interest. This is an extra interest rate that a lender charges when you fail to meet your loan obligations — in this case, not selling your property within the agreed timeframe. Interest costs: If interest is capitalised, it means you're not making repayments during the loan period, so the interest gets added to the loan balance instead of being paid separately. This means your loan grows each month. Making even small repayments can help keep this under control. Equity & serviceability: Lenders will assess how much equity you have and whether you can manage the loan during the bridging period. Loan-to-value ratio: If your End Debt ends up being more than 80% of the new property’s value, you may have to pay Lenders Mortgage Insurance (LMI). Existing loan setup: If your current lender doesn’t offer bridging loans, refinancing may be required — sometimes triggering break fees if your existing loan is fixed. This means you may have to pay a penalty if you end a fixed-rate home loan early (before the agreed term is up). Is a bridging loan right for you? That’s the big question. Bridging finance can offer flexibility and peace of mind, helping you move forward with confidence rather than being held back by uncertain sale timing. But it’s not without risk or cost — so it’s vital to understand the structure, timeframe, and repayment expectations. If you’re considering your next property move and want tailored advice on whether bridging finance suits your situation, talk to the team at Ascent Property Co. or Ascent Accountants. We can also put you in touch with finance brokers to discuss what is best for you.

The true cost of work perks.

May 12, 2025
That work perk might be costing you more than you think… Fringe Benefits Tax (FBT) is charged at a whopping 47% — the same as the top personal tax rate. That means lower salary or fewer benefits. So, while salary packaging can save tax, in many cases it ends up costing you more.

Act Fast to Reduce Your Tax Bill!

May 12, 2025
If you’re expecting a higher income this financial year, now is the time to act. We’ve put together 9 Smart Tax Planning Tips that could save you thousands — but they only work before 30 June.
More Posts