Following the introduction of mandatory market valuation reporting for SMSFs, the ATO issued “Valuation Guidelines for Self-Managed Super Funds”. According to the ATO, asset valuation is a key component in preparing meaningful SMSF financial reports. It has an impact on the returns for members and ultimately, SMSF sector performance as a whole.
Independent professional valuations are the best evidence to support the value attributed to an SMSFs investment in real property. Trustees can also rely on real estate agent valuations, comparable sales data and property valuation website data or rates notices as objective data for informing an independent valuation.
Importantly, the valuation needs to be reasonable and trustees need evidence to support the assumptions and methods underlying the valuation method if they have chosen methods other than an independent professional valuation. Trustees also need to use comparable sales data that relate to properties in the same location with similar features. Consideration must be given to whether the attributed value is improved or unimproved from the value on the rates notice.
Value can be attributed within a stipulated range that is fair and reasonable and based on objective and verifiable data. However, it is not acceptable to use a value at the lower end of the range for one purpose and at the other end of the range for another purpose.
There must be consistency in values used for different purposes. So, a value used for transactional CGT relief purposes will also then apply to calculations of Total Super Balances.
SMSF auditors are required to report on trustees compliance with requirements under SIS regulation 8.02B to report assets at market value. For more information on independence in valuation and an expert opinion, please contact us.
David Saul | SAUL SMSF | email@example.com