Last Updated on
Australia is providing clarity with respect to retirement funds and planning. Earlier today, local news medium Micky reported that the Australian Tax Office had sent warning letters to about 18,900 Self-Managed Super Funds (SMSFs), highlighting that they seem to be concentrating their investments on a single asset class.
Now, an SMSF is a case where an individual takes charge of the investment decisions concerning their retirement war chest; a deviation from the norm of hiring a financial planner or professional fund manager to help control these funds.
According to the report, Australian law confirms that it is illegal for a fund to have over 90 percent of its total holdings in a single asset.
Micky reports that SMSFs have been a particular focus of the crypto industry as of late, with up to AU$7 billion (about $2.85 billion) in retirement funds being managed in crypto assets.
However, despite this growth in people that buy cryptocurrency in a bid to secure their savings, the TAX Office is now seeking to remind citizens that they are obligated to comply with the legal requirement to adopt somewhat risk-averse investment strategies, essentially labeling cryptocurrencies a risky investment.
Per the report, if retirees are found wanting in this regard, they stand to pay a fine of up to AU$4,200 ($2,845). The report notes that while a vast majority of people who are at risk of running afoul of this rule are invested in properties, a rising number of them seem to have found crypto assets as an attractive investment portfolio.
While the Tax Office isn’t trying to discourage investments in cryptocurrencies, it is maintaining that the 90 percent threshold shouldn’t be crossed at any point.
In other related news, the country has continued to show signs of strong crypto support. Late last month, the country’s treasury issued an explanatory memorandum in which it expressed its desire to ban cash payments for goods and services whose values exceed AU$10,000. In addition to the ban, the treasury also plans to exclude the crypto sector from these restrictions.
In the document, lawmakers stated that this action was carried out in a bid to prevent such currencies from disappearing from the economy, adding that this step will continue to provide freedom to innovate.
In part, the document read, “Digital currency is a new and developing area in the Australian economy. Unlike physical currency, it does not have a firmly established regulatory framework or industry structure. This makes it difficult to apply the cash payment limit in a way that would not largely prevent the use of digital currency in Australia or significantly stifle innovation in the sector.”
If approved, the $10,000 limit will be implemented from January 1, 2020. The country has also done its fair bit to stabilize its stance on cryptocurrencies and taxes. Earlier this year, its tax authorities reported that they were contacting crypto traders concerning some of their most stringent tax issues, while also asking cryptocurrency exchanges for valuable data on their operations.