Bitcoin has seen some incredible growth over the last decade, making crypto SMSFs more appealing than ever for many Australians.
In fact, according to the Independent Reserve Cryptocurrency Index, roughly 1 in 3 SMSFs say they’re likely to invest in Bitcoin, and over $1 billion worth of crypto is held in SMSFs as of March 2024.
So, what are SMSFs and are they worth your time to set up?
Why use an SMSF?
Control over your money
A Self-Managed Super Fund (SMSF) puts you in the driver’s seat of your retirement. Unlike retail or industry super funds that make decisions for you, an SMSF lets you choose exactly where your money goes, including into high-growth assets like Bitcoin.
Tax benefits for crypto SMSFs
Selling crypto as an individual usually triggers capital gains tax (CGT) at your income tax rate. In contrast, SMSFs pay a flat 15% CGT, which drops to ~10% if held for over 12 months.
Example: A $1,000 Bitcoin investment that doubles in a year would incur $162.50 tax for an individual (e.g., at 32.5% income tax rate), but only $100 via an SMSF. That difference adds up over time.*
*The example above assumes Bitcoin has been held for 12 months. Click here for a longer explanation.
SMSF drawbacks
Setting up an SMSF involves additional compliance requirements and administrative costs, which can range from $1,000 to $5,000+ annually, depending on complexity.
These additional administration requirements tend to make SMSFs the more popular option for Australians with larger super balances.
But don’t stress, there are tools and platforms that make it easier.
Can an SMSF buy Bitcoin and crypto?
Yes, SMSFs can invest in Bitcoin and other cryptocurrencies. But it is important that your SMSF:
- Is allowed to invest in crypto under the trust deed
- Has crypto included in its investment strategy
- Avoid related-party transactions: your SMSF isn’t allowed to buy crypto from you, a family member, or anyone connected to the fund, and
- Keep proper records for tax and audit purposes.
Non-compliance can lead to penalties, so it’s important to get it right. You can read more on the ATO website.
How to buy Bitcoin with a crypto SMSF
While the steps vary between crypto exchanges, getting started is easier than you might think:
1. Create your SMSF correctly. If you’re setting up an SMSF from scratch, it’s worth consulting a financial advisor. SMSFs must be approved by the ATO and fulfil other requirements before trading.
2. Choose a trading platform. Once you’re sure you’ve ticked all the compliance boxes, you can decide which crypto exchange you’d like to use to start buying Bitcoin and crypto.
3. Book a consultation. If trading with bitcoin.com.au, we provide a free consultation and onboarding support to answer any questions you might have.
4. Create an SMSF account. Investing through an SMSF requires a dedicated account, and you will need to provide some documentation and ID.
Why are Aussie SMSFs getting into Bitcoin?
Limited supply = long-term value
One of Bitcoin’s biggest appeals is its fixed supply. Only 21 million Bitcoins will ever exist. Unlike traditional currencies like the Aussie dollar, Bitcoin can’t be printed in unlimited amounts, which is why it’s often described as digital gold.
Diversification
Bitcoin behaves differently to shares or property. Adding it to your SMSF can help spread risk and smooth out long-term returns. When one part of your portfolio dips, another might be rising, and that balance is key in retirement planning. However, it is important to remember that Bitcoin and other cryptocurrencies can be volatile.
See Bitcoin’s price performance over the years.
Real Aussie stories
Sydel Sierra: Gold Coast mum, Sydel went from receptionist to multi-millionaire after investing $900 into Bitcoin and altcoins in 2017. Within 90 days, her investment ballooned to $110,000. She now runs a crypto education group helping others get started.
Daniel Maegaard (aka Seedphrase): a Sunshine Coast local, Daniel turned $4,000 into millions and later launched an international DJ career under the name ‘Seedphrase’. He’s now a global figure in the Web3 scene.
While these stories show what is possible, it is also important to remember that crypto can be a risky investment. Consider your own financial needs before buying Bitcoin.
Start buying Bitcoin
At bitcoin.com.au we have dedicated accounts for SMSFs, individuals, companies and trusts. If you’re buying Bitcoin in Australia, we’ve got you covered.
