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Valuation of assets critical for TBC

The methodology used for the valuation of assets to determine compliance with the new transfer balance cap still requires clarity, according to an SMSF strategy expert.

“It seems to me that the whole big error with this is how to determine what a member’s balance is anyway,” @GrantSMSF founder Grant Abbott told the 2017 Australian SMSF Members Association conference in Melbourne.

“Valuations of investment products change. So I want to find out what the ATO commissioner wants in terms of valuations because then I’ll apply that.

“So for pensions, unless it’s a listed stock, if it’s any other investment, then the valuation I can use is going back to last 30 June.

“That’s unless it’s an unlisted trust or a property when it’s up to the trustee to make a reasonable objective assessment of what that property or unlisted trust is worth.

“It means the $1.6 million you’re worrying about may not be $1.6 million. It may in fact be $2 million or $1.2 million.”

According to Abbott, the discretionary nature of asset valuations could provide strategic opportunities for SMSF advisers in regard to pensions.

“Most of the asset balances you’re looking at are not correct. So we need to see what’s required from the law, bring it back, put it into play and then take it from there,” he suggested.

He stressed another critical element will be when a pension is considered to have commenced.

“The set-up of a pension happens when you furnish the associated documents and you put in the documents the date it is to be set up,” he said.

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