Valuing Fund Assets Correctly for the SMSF Annual Return

Written by Supervision Group

Supervision Group has a highly experienced team of professionals with one goal, to improve how you interact with your Business, Super, Personal Finances and Investments to grow your wealth. We know what it takes to grow and thrive in today’s fast-paced economy.

29 May 2024

by ATO.GOV.AU 

Every year you need to value your SMSFs assets and provide supporting evidence to your auditor. A key responsibility self-managed super fund (SMSF) trustees have every income year is valuing your fund’s assets at ‘market value’. Prior to lodging your SMSF annual return (SAR), your fund’s SMSF auditor is required to check the assets have been valued correctly and assess and document whether the basis for the valuation is appropriate.

We (ATO) are increasingly using data to identify and deal with risks and have recently identified a number of funds who have maintained the same values on reported SMSF assets in their annual return.

We are concerned these funds may not be meeting their legal requirement to value and report their assets at ‘market value’ every year. Of specific concern is a higher risk category of approximately 16,500 funds which have reported certain classes of assets at the same value for at least three income years. This includes residential and commercial property, unlisted companies, and unlisted trust investments.

There were more than 1,000 SMSF auditors associated with this high-risk population and our data tells us no auditor contravention reports (ACRs) were lodged for potential breaches of the market valuation rules for the assets.

To address this, we have commenced sending targeted messages to trustees and auditors about this obligation and we will be monitoring the approach taken by the funds in their next annual return.

Precision in valuations is paramount for informed financial decisions; let’s collaborate to ensure accurate assessments and safeguard your Superannuation entitlements.

From the Editor: WHAT IF YOUR SUPERANNUATION ISN’T ACCURATELY VALUED, RISKING YOUR FINANCIAL FUTURE?

The ATO is targeting valuations.It has been broadcast in different SMSF industry publications in recent months and Auditors will view this communication as a clear directive going forward. Getting valuations right is vital to give the members an accurate picture of the value of their Superannuation entitlements each year.If a valuation is higher than it should be, members may make plans based on false assumptions.

Undervaluing an asset will also do the same thing. Members balances will make you eligible for certain tax benefits, so the ATO is making sure that member balances are based on reality, not kept artificially low to take advantage of tax concessions. We understand the difficulty in preparing valuations for assets that are not easily sellable or do not have a recent sales history. If valuations are not readily available or horrendously expensive, please speak to us about how we can come up with clever solutions to make valuations available and value for money.

Blogs & Resources

Digital Estate Planning: Safeguard Your Online Legacy

Digital Estate Planning: Safeguard Your Online Legacy

In our increasingly digital world, where much of our lives are conducted online, it’s crucial to consider the fate of our digital assets after we’re gone. Just as protecting physical assets is essential, safeguarding your digital legacy is equally important. Digital...

read more