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ATO, Auditing

ATO releases new valuation guidelines

SMSF asset valuation

The ATO has updated its SMSF asset valuation guidelines, but has reminded trustees and auditors of the need to have accurate information.

The ATO has modified its guidelines for asset valuation inside an SMSF to reduce the likelihood of a valuation being rejected and an amended figure being imposed by the regulator.

In a statement on its website, the ATO warned an asset valuation may be reviewed and trustees should refer to the new guideline, which has replaced Superannuation Circular 2003/1, but also pointed out it was not a comprehensive handbook about valuations for assets in an SMSF.

It stated a determination of an asset’s value will generally be accepted if it does not conflict with the market valuation or the ATO’s guide, there was no evidence a different value was used for a corresponding capital gains tax event and the determination is based on supportable data.

To achieve this, it also noted a fair and reasonable valuation took into account all relevant factors that could impact on the asset’s value, it was undertaken in good faith, used a rational approach and is capable of explanation to a third party.

SMSF trustees were also reminded they remain responsible for the management of investments and the related strategy to achieve the retirement goals of members, and SMSF auditors were also required to ensure assets were correctly and appropriately valued.

The regulator said it is not the role of the auditor to determine market value, but rather accumulate objective and supportable evidence or request related documents from trustees.

In an additional alert the ATO revealed the release of personal transfer balance cap data has been delayed from 5 July 2021 to 15 July 2021 due to technical issues, limiting its ability to deploy indexation for all individuals who currently have a transfer balance account.

It has advised members starting a new retirement plan this month to take the system malfunction into consideration, meanwhile members starting their first retirement-phase income stream on or after 1 July will still have a personal transfer balance cap of $1.7 million.

Super fund members are being encouraged to continue reporting transfer balance cap information, but the report will not be processed during the period.

The ATO said it will not be capable of issuing or revoking excess transfer balance determinations it has sent to a member or commutation authorities it has sent to funds.

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