SMSF - holding Cryptocurrencies and Bullion
As the main vehicle for saving and preserving your wealth as the sole means of support for you in your retirement, the cornerstone of any super fund must be balance. We all recall visions of retirees in tears after the GFC as their sole source of income went up in smoke overnight.
Balancing your wealth is about having a portfolio with assets that are not correlated or that act counter-cyclically. Shares and property can crash together whereas gold and silver bullion can be where the money flees to in times of such crisis, sending their price up. Waiting until then is too late.
Since the GFC we have not actually seen Governments fix the core issues of what caused our last big crash. Indeed we have more debt and more artificial economic stimulus happening in the global economy than ever before. We have sharemarkets inflated by printed money and property inflated by record low interest rates. Conversely we have gold and silver, traditional safe haven or defensive assets, at prices coming off cyclical lows.
Gold and silver bullion are allowable assets in your SMSF.
Cryptocurrencies are allowable assets in your SMSF.
Likewise the new form of 'money', Bitcoin and similar crypto currencies, are seeing incredible price growth and SMSF demand as more and more people move their investments to these instruments of intrinsic value, completely separate to the highly correlated 'traditional' financial markets such as shares.
By placing a percentage of your SMSF investments in real, physical gold and silver bullion and Bitcoin you are balancing your risks. You are also getting some of that money you will rely on ‘out of the system’ – no piece of paper saying you own something out of your control.
Finally, silver and gold bullion can be bought in all shapes and sizes. Buying smaller size bullion bars means you have a very liquid asset you can sell as you need to in smaller amounts if you so desire. Unlike property or other large hard assets, bullion is divisible, giving you ultimate flexibility to sell just what you need, when you need. That might for instance be a bar every week or month during your pension phase as a form of income. The same goes for Bitcoin where you can sell a single 8th decimal place of a Bitcoin whenever you like.
Your Investment Strategy
When setting up your SMSF you and the other trustees must develop an Investment Strategy as the framework for making your investment decisions. The ATO list the following as key considerations for investments:
- diversification (investing in a range of assets and asset classes)
- the risk and likely return from investments, to maximise member returns
- the liquidity of the fund’s assets (how easily they can be converted to cash to meet fund expenses)
Gold and silver bullion and Bitcoin meet the diversification, risk and return, and liquidity requirements. There is some disinformation around about what percentages of various assets you should have in your fund. The ATO makes no such demands and it is up to you ultimately, guided by the ATO per above, to make your own decisions.
Buying Bullion & Bitcoin for your SMSF
As with any purchase of bullion or Bitcoin from Ainslie Wealth, doing so couldn’t be easier! The only difference to a personal purchase is that we need you to send us a copy of the front and signing page of your SMSF Trust Deed and you will have to verify the ID's of each Trustee/Director before you pick up your metal or we send it to you or you get your Bitcoin. You only need to provide this once.
That means you can simply visit our store, our website, or phone us with an order as outlined in Buying Bitcoin
Web orders require you to select your crypto or bullion product and complete the order process. You can pay instantly for your selected product using Bitcoin, or if you are purchasing through a direct deposit or cash, we will email you an invoice to complete this payment on completion of your selection. We require payment for this purchase within 24 hours. Products must be picked up from our Brisbane office within 10 days.
If you are not handy to our Brisbane CBD store we can ship your physical bullion goods to you promptly and fully insured. Freight rates are calculated at the time of purchase on the website. We won't ship a Cryptocurrency wallet, you will need to come to the store or elect to use our Bitcoin Storage Account service.
Another popular alternative for SMSF’s is our Phsyical bullion Storage Account options. You can buy either Allocated or Unallocated gold and/or silver bullion where we securely hold it for you. One advantage of this is we issue you with a certificate of holding which you can provide to your auditor or SMSF administrator at the end of each financial year. Simple! As mentioned earlier, we have the same secure storage service for Bitcoin.
Storing Bullion & Bitcoin for your SMSF
There are a couple of things to consider when it comes to storing your SMSF bullion. Firstly if you have bought bullion coins they are deemed to be a ‘collectable’ by the SMSF regulations and need to be insured in the fund’s name, stored independently in a secure facility and regularly audited. Gold and silver bullion bars do not get captured by these regulations however you should check with your SMSF manager as some still believe independent secure storage is required. We are not advisors in that regard.
That said, many customers use Reserve Vault in Brisbane for storing their silver and gold bullion for a number of reasons:
- It is the ultimate in independent ultra -secure storage in Brisbane at very reasonable prices
- It removes the personal risk of storing at home
- It provides All Risks insurance cover at prices a fraction of what you can get independently. It is very difficult to get insurance in your home and banks don’t offer it.
- Reserve Vault in conjunction with SAAS offers very competitive independent annual audits of your holdings to satisfy your trustee obligations.
- Ainslie Wealth delivers your purchases free of charge and fully insured to Reserve Vault for you.
- As discussed below, you can sell back to Ainslie Bullion directly from Reserve Vault without having to bring your goods into our store.
The same goes for your Bitcoin Wallet. This will fit in either a Secure Folder ($99/yr) or a XS safe deposit box ($230/yr), both secure within the vault.
Prices for storage may vary from our prices listed here and we recommend visiting the Reserve Vault website to see current pricing.
Ainslie Wealth recommends Reserve Vault for your secure storage needs.
Selling Bullion & Bitcoin from your SMSF
As mentioned above, a key advantage of gold and silver bullion and Bitcoin in your SMSF is its flexible liquidity. Sell how much you need, when you need to, without fuss. Just as we sell silver and gold bullion and Bitcoin we also buy it back. We issue invoices for everything so you have a clear paper trail for your records. Simply walk into our store and sell it, or if you have a storage account simply instruct us to sell how much you want and we will deposit the funds immediately into your nominated account. If you have bullion stored at Reserve Vault you don’t even need to come into our store. Simply phone us and we will arrange collection directly from Reserve Vault once you hand it over to them, and again we will just directly transfer money to your nominated account.
Setting up your SMSF
Please note - Ainslie Wealth does not setup or manage your SMSF. We just sell gold and silver bullion and cryptocurrencies. If you are looking for more information about creating your SMSF, please consider the following links.
Specifically for bitcoin (and other crypto's) our friends at my smsf have the following advice:
- Ideally the SMSF Deed should recognise crypto currency under section 62 of the SIS Act, the umpire is your auditor in most cases. It is important that your investment strategy reflects Bitcoin investments … ( to download their FREE Investment strategy and Derivatives risk statement, click here). Older SMSF ‘s may need to look at updating their deed to allow for investment in Crypto currency
- Make sure your auditor is satisfied with the arm’s length storage of Bitcoins – The Ainslie service has a great low cost solution for storage and reporting on Bitcoin investments
- Most small brokers in the Australian market cap the limits on initial trades to $2000 to make more money from Bitcoin trades and the exchanges and traders can source limited supply – Ainslie allows for simple, secure larger trades suitable for an SMSF
For more, visit:
New Brighton Capital
Australian Taxation Office / SMSF
Crypto Tax Austalia