Cryptocurrency

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14 October 2022

The last few years have seen Cryptocurrency as an investment option, gain in popularity, becoming accepted as an asset class that can be owned by SMSFs.

Given that Cryptocurrency is still in its infancy and therefore not widely understood amongst the wider population, when an accountant or adviser discovers they have clients who have invested in Cryptocurrency assets through their SMSF, it could leave them uncertain as to what information needs to be provided to the auditor of the SMSF. Therefore, this article highlights information that an auditor of a SMSF will need to review.  

Cryptocurrency held through an Exchange

If the Cryptocurrency assets are held through an Exchange, the following documentation will need to be provided for each exchange:

Cryptocurrency held in a wallet outside an Exchange

For Cryptocurrency assets that are held in a wallet outside an Exchange, the following documentation will certainly need to be provided:

  • Full year transaction history for each Exchange that was used during the year- needs to show purchases, sales and transfer information and the value of the transactions that occurred.
  • Cash account reports for each Exchange that has been used.
  • Details about the name recorded on each Exchange account that is being used.
  • Any details (either current or historical) that shows the name of the SMSF in connection with the wallet.
  • One of the following documents:
    • A 30 June dated Holdings Report from the wallet (depends on the capabilities of the wallet and its associated software if it can produce this information).
    • A screenshot showing the running balance and all the movements for the financial year, provided a running balance of the quantity held appears on a screenshot of the wallet (depends on the type of wallet being used and if it has been designed to show this information on a screenshot). This might need to be done multiple times, if there are multiple Cryptocurrency assets being held on the wallet.
    • A screenshot showing the quantities held at 30 June, if a running balance of the quantity held does not appear on a screenshot of the wallet.
  • Information from the wallet showing all movements that have occurred across the financial year (especially relevant if information from either document 1 or 3 above needs to be provided).
  • The Public Key(s) connected to the wallet and Internet links showing the existence of information connected to the Public Key(s). A Public Key is an alphanumeric ID that can be used to check on the Blockchain for quantities held or transactions that have occurred. There can be multiple Public Keys connected to the one wallet.
  • Information about the market prices being used to value the assets and the source of the market price information.
  • Information about the security features of the wallet being used and the backing up and restoration procedures that are in place to ensure that access to the assets are not lost.

Preferably, the information to be received should be provided in a PDF file format. However, if this is not possible, then receiving it as a CSV file in Excel will suffice. 

It is possible that the above information could be recorded in a foreign currency that needs to be converted in Australian dollars. If this is the case, then the necessary foreign currency conversion information will also need to be provided.  

An accountant or adviser might also decide to use a Cryptocurrency tax reporting service to assist with the determination of capital gains and other income amounts for the SMSF as well as to determine the valuation of assets held at 30 June. If this occurs, then it will be necessary to obtain a copy of all the reports produced by the tax reporting service.

If an account with an Exchange does not record the SMSF as being the owner of the account, or if there is no information available to show the name of the SMSF in connection with the wallet, then it will also be necessary to obtain a signed Trustee Declaration (Declaration/Acknowledgement of Trust document) that confirms the assets are held by the SMSF.

For Cryptocurrency assets being held through a wallet, depending on the particular assets being held, it might also be necessary for particular alphanumeric IDs (also known as the Transaction Hash) to be requested for particular transactions due to differences in the design of particular Blockchains and the information they reveal. If this is the case, then Internet links will also need to be provided showing the existence of information connected to the specific Transaction Hash.

Considerations 

The above information deals with only the 'simplest' Cryptocurrency assets. It does not cover any of the specialised areas (E.g. Non-Fungible Tokens.)

Even though we've outlined long list of documents that tries to cover as many situations as possible, there is always a possibility that a unique situation arises, requiring additional information that has not been listed above 

The final effect of this information on the audit report (i.e. an unqualified or qualified audit opinion) and the need for any reporting to the ATO can only be determined once the documentation has been provided and seeing the information that this documentation reveals.

For more information on what documentation is required for cryptocurrency investments, get in touch with our team at www.unisonfg.com.au/contact-us

By David Grigg 

Manager, External Audit

Unison ABN 31 315 285 606 © Findex 2026

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