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The Australian Tax Office (ATO) has issued 18,000 warning letters to investors of self-managed super funds (SMSFs) for concentrating the majority of their retirement savings in cryptocurrencies, according to local news outlet Micky.
In its letter, the office said that retirees have a “duty to comply with legal requirements to adopt investment strategies avoiding risky investments.” Non-compliance could see them face a fine of up to AU$2,400 (US$2,852).
As per the report, investing more than 90% of retirement funds on a single class, such as property and cryptocurrency, is considered illegal under Australian law. SMSFs are a type of retirement accounts that are handled by individuals instead of a professional fund manager.
“We have already seen two instances of SMSFs losing significant amounts of their retirement savings through investment in cryptocurrency,” an office’s spokesperson told the news site.
The Australian Securities and Investments Commission also particularly warned SMSF holders of the risks in investing in crypto.
“Be wary of services offering to establish an SMSF for you in order to gain exposure to cryptocurrencies. Not only does operating an SMSF involve significant time, skills and responsibility, you may also be putting your retirement savings at risk.”
However, to be clear, the warning is not intended for a specific asset but rather for people who are highly overexposed to any single asset. In addition, ATO also said it will also write letters to SMSFs auditors.
Meanwhile, the U.S. Internal Revenue Services (IRS) has also sent out another round of letters to cryptocurrency holders, specifying the amount IRS believe the taxpayers owe. Recipients are required to respond within 30 days, regardless of whether or not they agree with the tax assessment. They may also file a dispute.
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