Valuation Requirements for SMSF’s

Superannuation laws require SMSF assets to be valued each year in the preparation of financial accounts and statements. The ATO has recently advised that they are concerned that funds are not meeting the legal requirement to value and report their assets at ‘market value’ and have stressed the importance of meeting this requirement in fulfilling reporting obligations.

Annual asset valuations are not legally required to be undertaken by a qualified valuer however it is the trustee’s responsibility to provide evidence to the SMSF auditor which supports the assets ‘market value’ each year.

The ‘market value’ must be determined using ‘objective and supportable data’ and must be able to demonstrate that a ‘fair and reasonable’ process has been used to determine the value. The ATO advises that a valuation is considered ‘fair and reasonable’ when it meets the following criteria:

  • it takes into account all relevant factors and considerations likely to affect the value of the asset.

  • it has been undertaken in good faith.

  • it uses a rational and reasoned process.

  • it is capable of explanation to a third party.

In some instances, the ATO recommends using a qualified valuer, such as

  • where the value of the asset represents a significant proportion of the fund's value.

  • the nature of the asset indicates that the valuation is likely to be complex.

  • the asset's value has changed significantly since it was last valued.

  • Or following the occurrence of a ‘significant event’, such as a natural disaster, global pandemic, macro-economic events, market volatility or changes to the asset itself.

The ATO advises that when a market valuation of an asset is required it will be more credible if undertaken by a qualified valuer and that, “generally, if you engage and properly instruct a professional valuer, you will not be liable for penalties if we find that professional valuation is deficient.”

At Snowy Monaro Valuers we tailer our service level to meet your valuation needs with a fee schedule that reflects the level of service required. If you would like more information or wish to discuss your valuation needs with a qualified valuer, please get in touch with Snowy Monaro Valuers on 0405 743 157 or email admin@snowymonarovaluers.com.au.