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Self‑Managed Superannuation Funds (SMSFs) are increasingly investing in digital assets, including NFTs (Non‑Fungible Tokens).
Because NFTs are unique, volatile, and often lightly regulated, they present significant audit risks and require enhanced audit evidence, similar to cryptocurrency.

Both the ATO and ASIC have recently emphasised the importance of sufficient audit evidence, particularly for asset valuation, arm’s‑length dealings, and ownership verification. For example, the ATO notes that failing to obtain evidence of arm’s‑length transactions and market value is one of the most common reasons auditors are referred to ASIC. ASIC has also acted against auditors for failing to obtain evidence supporting borrowings, asset values, and compliance with SIS law.

Below is a complete outline of what an SMSF auditor must do when NFTs appear in the fund’s investment portfolio.

1. Verify Wallet Ownership & Existence of the NFT

Auditors must confirm the NFT exists and is controlled by the SMSF, not a member.

Evidence you should obtain:

⚠ Screenshots alone are not sufficient audit evidence.
The ATO has repeatedly referred auditors to ASIC for insufficient evidence of asset ownership and valuation (crypto-like assets included).

2. Classify the NFT Correctly (Investment vs Collectable)

Depending on its purpose and characteristics, an NFT may be treated as:

A. A Collectable or Personal‑Use Asset

Examples:

If so, SISR 13.18AA rules apply, including:

B. An Investment Asset

Examples:

Collectables have stricter compliance rules, so classification must be documented.

3. Test for Related‑Party Transactions (SIS Act s66)

NFTs often originate from creators, founders, or related-party businesses.

The auditor must determine:

Prohibited acquisitions from related parties are a common basis for ATO→ASIC referral when auditors fail to detect or report breaches. [ato.gov.au]

4. Test Arm’s‑Length Terms (SIS Act s109)

ATO auditor reviews show arm’s‑length evidence is one of the top weaknesses in SMSF audit files and leads to ASIC referrals.

For NFTs, auditors must consider:

If arm’s‑length terms cannot be supported → SIS breach risk + potential ACR.

5. Verify 30 June Valuation (SISR 8.02B)

NFT valuation is one of the highest audit‑risk areas.

Mandatory evidence includes:

ASIC has acted against auditors who failed to obtain evidence supporting market values of fund assets, including digital and hard‑to-value assets.

6. Review Investment Strategy Compliance

The SMSF investment strategy must explicitly address:

NFTs often represent high concentration risk and speculative exposure, making this review essential.

7. Assess Storage, Security & Sole-Purpose Test

You must confirm:

Personal use = SIS Act s62 breach.

8. Required Audit Documentation (ASA 230)

Your audit file must contain:

If evidence is missing → scope limitation → modified audit opinion.

9. Opinion Modification Triggers

You must qualify or disclaim if any of the following occur:

ASIC and ATO have sanctioned auditors for exactly these types of evidence failures, including digital assets, loans, property, and LRBA testing deficiencies.

Conclusion

NFTs held inside SMSFs pose significant audit complexity, due to:

SMSF auditors must apply enhanced audit procedures, obtain robust independent evidence, and comply strictly with SIS and ASA standards to avoid scope limitations — or potential regulator action.