Professional opinion: ATO issues advice reminder in volatile times

Professional opinion: ATO issues advice reminder in volatile times?

?If the first 18 months post-COVID gave novice investors confidence that nothing could go wrong, this year has brought home the truth that in markets anything can happen.

?During 2022 we have seen shock inflation, rising interest rates and ding-dong price swings across all asset prices.

?After a relentless run of bad macro-economic news, markets last week seized on the glimmer of positivity contained in slightly easing US inflation figures to send stock indices on a rampage.

The US Nasdaq index, which is heavily skewed to technology companies, recorded one of its biggest ever one-day jumps in the wake of the inflation news, soaring 7.4 per cent.

Other share benchmarks, including the ASX, followed suit, albeit not quite at Nasdaq-level enthusiasm.

In the same week, however, the implosion of cypto-currency exchange, FTX, triggered sharp falls across the speculative ‘digital asset’ market that caught out even seasoned institutional investors.

The crypto-crash would also have spilled over to at least some corners of the self-managed superannuation fund (SMSF) sector where digital assets appear to be gaining a foothold.

According to the latest Australian Tax Office (ATO) statistics, SMSFs collectively owned about $1.4 billion in crypto-assets as at the end of June this year – more than five-times the amount reported two years prior.

In a nod to the trend, the ATO has produced a raft of materials to guide SMSF trustees on their reporting and tax obligations in relation to crypto-currencies.

And in October this year the tax department published a note suggesting that for SMSF members “thinking about investing in crypto assets, we recommend you seek professional advice from a licensed financial adviser”.

The recent plunge in crypto might see some investors looking for help but the broader market volatility is also more challenging for SMSF trustees in general.

Perhaps to front-foot current anxieties, the ATO offered further guidance to SMSF trustees in October about “appointing the right professional for the job”.

“Running an Self-Managed Super Fund (SMSF) can be difficult and there will be times where you are unsure of who to turn to for advice. There are a wide variety of professionals you can appoint to help run your SMSF so you can feel at ease,” the ATO says.

“You should already know about auditors and tax agents, but there are many more who can help you, such as fund administrators and financial advisers.”

?Sensibly, the ATO says SMSF trustees should involve professionals “right from the start” but amid rising volatility and falling investor confidence, advice can offer something worthwhile anytime.