The ATO (Australian Tax Office) has sent cautioning letters to investors who have invested most of their retirement investment funds in cryptocurrencies. As per a local news agency, the Australian Tax Office has sent letters to caution approximately 18,000 SMSFs (Self Managed Super Funds) in the nation against investing over 90 percent of their funds in property or cryptocurrencies.
SMSF is a term used to portray retirement funds where the people decide how to invest their funds. When a regulator found out that SMSFs are investing over 90% of their portfolio in crypto or properties, a warning letter has been sent to them.
In the meantime, an Australian Tax Office spokesperson told the local news agency that
They have already seen two instances of SMSFs losing significant amounts of their retirement savings through investment in cryptocurrency.
Furthermore, as a significant aspect of an ATO to caution against high-risk retirement investments methods, around 18,000 holders of SMSFs (Self-Managed Super Funds), a kind of retirement account privately handled by people, were advised they face punishments up to 4,200 AUD for breaching guidelines, as indicated by a report from local media.
While the letter focused on any SMSF holder with more than 90 percent of their retirement reserve funds in a single asset, mostly in property, the ATO additionally singled out cryptocurrencies as a high-risk venture. The letters from the ATO cautions SMSFs that they have a ‘duty to comply with legal requirements to adopt investment strategies avoiding risky investments.’
SMSFs are a significant development area for cryptocurrencies in Australia, given consolidated resources of around $700 billion. SMSFs are investment funds where people assume responsibility for their retirement fund investment choices, instead of outsourcing the fund management to experts.
Succinctly put, the tax office cautioned that even though they are managing SMSFs, people were required to comply with legal guidelines by adopting investment methodologies that are free of risky speculations. Moreover, it also said that Inability to abide by the said guideline would pull in a fine of up to $AUD 4200 ($2800) for retired people, as reported by the warning letter.
Moreover, the individuals who are breaking the guidelines have invested in the property; however, an expanding number are investing in cryptocurrency, which is not an issue as long as these investments abide by regulations.