Current ATO guidelines suggest that property held within an SMSF should be assessed against the market annually and that this assessment should be documented. If substantial events like renovations or shifts in the local real estate landscape occur, an updated valuation might be required sooner.  

With the introduction of the new Division 296 tax, frequent property valuations will be important to calculate the fund’s exposure to the new tax. This is important as unrealised gains are included in the calculation of the proposed Div 296 tax. If your property valuations have not changed in the last few years the ATO can identify and investigate these funds. 

Background 

Recently the ATO has been assessing more than 16,500 SMSFs that have reported the same asset values for at least three years. These assets include residential and commercial properties, unlisted companies, and trust investments.  

Additionally, over 1000 SMSF auditors are connected to this group, but none have reported any breaches of market valuation rules for these assets. The ATO is using data more effectively to spot and address risks and has noticed many funds keeping the same asset values in their annual returns year after year. This raises concerns about whether these funds are fulfilling their legal duty to report asset values at “market value” annually. 

The ATO is now sending specific messages to trustees and auditors, reminding them of this obligation and will be keeping an eye on how these funds report their values in the next annual return. 

What does this mean for trustees? 

Trustees must ensure their assets are valued at “market value” each year and provide evidence to their auditor. It’s crucial for trustees to meet this responsibility to avoid potential additional taxes and administrative penalties. 

As part of the annual audit, trustees must offer objective and supportable evidence to their SMSF auditor for asset valuation. This includes all relevant documents requested by the auditor. 

Property valuations 

Obtaining affordable, compliant property valuations can be problematic. Look for a property valuer that provides a report which includes property and location details along with details of comparable sales and leases of similar properties within the local areas surrounding the subject property. This adheres to current compliance requirements set out by the ATO and Superannuation Industry Regulations. 

Fees vary for a SMSF Property Market Opinion Report but as a guide: 

• Residential Assets: Start from $300 +GST 
• General Industrial, Retail, Commercial, Development Land, and Office Assets (Single Tenant): Start from $450 +GST  

Any specialised property may be subject to a tailored quote. 

To request a market opinion you will need to provide the following details: 

• Superfund Entity and ABN 
• Property Address 
• Current Passing Rent and Outgoings 
• Floor Plan (if available, we can sometimes determine floor areas without one) 
• Any previous valuation reports if available.

We can help

For assistance in obtaining a valuation contact Partners Wealth Group’s SMSF expert Alex Swansson at aswansson@pwg.com.au or alternatively contact Areacodes on admin@areacodes.com.au.

 

This information is general in nature and is provided by Partners Wealth Group. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.