An SMSF technical specialist has dispelled practitioner misconceptions as to whether new asset valuation rules and standards will be introduced as part of the proposed Division 296 tax.
“There are no [asset] valuation methods for Division 296 purposes. SIS (Superannuation Industry (Supervision)) Regulation 8.02B requires assets of an SMSF to be disclosed at market value,” Accurium head of SMSF education Mark Ellem told attendees of a technical webinar last week.
Ellem noted market value is defined in section 10 of the SIS Act and constitutes an amount a willing buyer of an asset could reasonably be expected to pay to acquire it from a willing seller.
“[So] there is no change to how market value is calculated because of Division 296,” he confirmed.
However, he did acknowledge there will be increased scrutiny on asset valuations when the new measure is implemented.
“[But] I would say there should have always been focus and scrutiny on market values [with regard to SMSF assets]. Those year-end market values determine a member’s total super balance and a member’s total super balance determines access to concessions and caps,” he recognised.
He suggested practitioners and trustees could reference the ATO website should they be unclear about asset valuations.
“The ATO has outlined in its valuation guidelines for SMSFs as to the methodology by which to disclose fund assets at market value,” he said.
Further, he pointed out there are other sources trustees and practitioners can use to seek help with valuing assets on a commercial basis.
“[If there is any confusion], talk to the fund auditor who you use for all of your funds. [Ask them] what is the appropriate methodology and evidence that they need to substantiate market value. I would suspect it hasn’t changes since the 2012/13 [financial] year when SMSFs were required to disclose [assets] at market value,” he suggested.
