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Amanda Guruge, November 23 2021

Valuations for SMSFs

The ATO has recently released an updated the message of accurately valuing SMSF assets. As the ATO has stated on their website, ‘asset valuation is a key component in preparing meaningful SMSF financial reports’. As the market goes up and down, impacted by the outside world, this means that the assets inside your SMSF also change to the market. 

 ATO guidelines for valuing SMSF assets

The ATO’s guidelines on valuing SMSF assets set out strict requirements for valuations, however the ATO has noted that a reasonable estimate value may be appropriate for TBAR purposes for funds with unlisted assets. 

The ATO’s updated version of the guidelines for valuing assets in superannuation, includes why assets need to be valued, who can value them and guidance on general valuation principles. The web-based guideline replaces the previous Superannuation Circular 2003/1.

Unsurprisingly, the ATO has stated that they will generally accept a determination of an asset's value, as long as:

 Why do assets need to be valued?

Trustees obligation including being in line with the law and providing accurate and up-to-date valuations.

A valuation of assets is required to confirm your SMSF has complied with relevant super law for:

 Who can value assets?

Depending on the situation, a valuation may be undertaken by a:

In certain instances, the law requires valuations be undertaken by a qualified, independent valuer.

 When you need a qualified independent valuer?

The super laws require a valuation by a qualified independent valuer in the following circumstances:

You should also consider the use of a qualified independent valuer if either the:

 Unlisted assets

For each investment, the fund’s auditor will risk-assess the evidence available and whether it is appropriate and reliable. This may include obtaining independent verification.

 The level of evidence required to substantiate the investment may depend on the proportion of the fund allocated to the investment/loan. For example, the auditor may require a greater level of confidence to confirm whether a loan of $500,000 is recoverable compared to a similar loan with an outstanding balance of $20,000.

 In assessing the valuation of these assets, the types of supporting evidence your fund’s auditor would look for include:

On the flipside, an auditor would usually seek further information from you where:

TBAR lodgement and valuations

The ATO stated that it is acceptable to use a reasonable estimate value to calculate the value of a pension that is commenced partway through the year. For example, where a fund is required to report quarterly, and a pension is started 1 July, the ATO understand that trustees will be unable to access the required documents to value unlisted assets.

Although the reasonable estimate value can be used in the above-described circumstance, the reasonable estimate approach is not appropriate for other valuation requirements (SMSF EOY accounts, calculating ECPI).

How can Tax Controversy Partners help you?

At Tax Controversy Partners, our experienced lawyers can represent your best interests in providing advice that is compliant with the current case law and legislation and based on our understanding of likely ATO actions. 

Please contact us using our online contact form, via email at admin@taxcontroverypartners.com.au or by phone at 02 8513 3813.

Written by

Amanda Guruge


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