Most crypto contraventions have nothing to do with the coins. The holding is real, the fund paid for it, the price is defensible, and the fund is still in breach because of a decision made in the paperwork around it.
This series takes the audit one test at a time. Part 1 was ownership, Part 2 existence and control, Part 3 value. This part is compliance.
The starting position is settled: no super law prohibits an SMSF from holding crypto. The ATO tells auditors to confirm it is permitted under the trust deed, matches the investment strategy, is owned by the fund and is reported at market value. Here is where funds come unstuck.
1. The trust deed does not allow it
Deeds written before crypto existed may not contemplate it, and some restrict investments to set classes. Your auditor checks the deed permits the investment: not whether it was a good idea, but whether the fund had the power.
If the deed is silent or restrictive, that is a job for your adviser before the next purchase.
2. The investment strategy does not seriously address it
Regulation 4.09 of the SIS Regulations is an operating standard: the trustee must formulate, review regularly and give effect to an investment strategy having regard to the fund's whole circumstances. It names five, and does not close the list: risk and likely return; the mix of investments and its diversification; liquidity against expected cash flow; the ability to meet liabilities; and whether the trustees should hold insurance for members.
A one-line mention of digital assets with a range spanning the whole fund has regard to nothing. With an asset this volatile, an auditor looks for evidence the trustees weighed the risk, the size of the exposure, and whether the fund can still pay what it owes if the holding falls.
3. Moving your own crypto into the fund
Section 66 of the SIS Act bars a trustee from intentionally acquiring an asset from a related party. The exceptions are closed: listed securities and business real property at market value, certain in-house assets, fund mergers, relationship breakdowns, and Regulator determinations. Crypto fits none, and the ATO says so: crypto assets are not listed securities and cannot be acquired from a related party.
Trustees and members are related parties of their own fund, so they cannot make in-specie contributions of crypto, meaning transfers of the coins rather than cash. Not as a contribution. Not by selling them to the fund. Cash is left alone: acquiring an asset, the section says, does not include accepting money.
4. Someone gets a personal benefit
Section 62 requires the fund to be maintained for the sole purpose of providing retirement benefits to its members, or death benefits to a member's dependants or legal personal representative if the member dies first.
The ATO's own example is a trustee or related party receiving a personal reward when the fund's assets go into a particular investment group. In crypto that shape is everywhere: referral rebates, sign-up bonuses, revenue shares. Where more than an incidental benefit lands anywhere but the fund, the sole purpose test is in question.
Related, and tested alongside it: section 109. It does not ban dealing with a related party. Where the parties are not at arm's length, meaning not on terms unrelated parties would have agreed, it requires terms no more favourable to that party. Buying the fund's crypto through an entity you control, on terms you set, is what it catches.
5. Staking income treated casually
Staking, where the fund commits coins to a protocol for a reward, produces ordinary income. The ATO puts it plainly: the money value of the additional tokens is ordinary income when you receive them. Value each reward in Australian dollars on the day it arrives, and declare every one.
This one is a tax outcome rather than a super-law breach, and it bites just as hard. Where the income comes from a scheme in which the parties were not at arm's length, the non-arm's-length income rules apply and the Income Tax Rates Act taxes it at 45% instead of 15%.
6. Paying a pension in crypto
Where a member has met a condition of release and the deed permits it, a lump sum can be paid in specie by handing over the coins. The ATO treats that transfer as a disposal, which may result in capital gains tax.
The minimum annual pension payment is different. It has to be money: the ATO requires it to be recorded as debited from the fund's bank account and credited to the member's. A fund heavily weighted to crypto and paying pensions needs liquidity planning, documented in the strategy.
The paperwork underneath all six
The ATO asks trustees to record all transactions: purchases, sales and transfers, along with the wallet details and any changes. Sales and transfers are disposals, so those records are what the capital gains calculation rests on.
The ATO's crypto assets data-matching program collected exchange data for non-individual accounts, including super funds, for every financial year to 2025-26. It compares that against its own records when selecting taxpayers for compliance activity.
If you have already tripped one of these
Contraventions can often be rectified. For one that has not been, the ATO runs an SMSF voluntary disclosure service, which a trustee or adviser can use without waiting for the auditor. It does not remove the auditor's obligation: contraventions still go to the ATO in an Auditor Contravention Report.
Crypto is not forbidden in an SMSF: it is simply harder to evidence. Where ownership, existence, value and compliance are settled before 30 June, a crypto audit is no more painful than any other. That is the series.
SMSF Audit Group are independent, ASIC-registered SMSF auditors. If your fund holds crypto, get in touch and we will tell you exactly what your audit file needs.