The ATO has advised SMSF trustees that asset valuations within their funds needs to be timely, accurate and above board when reporting them within an SMSF annual report (SAR).
In an update on its website, the regulator stated trustees of an SMSF should complete asset valuations early as they are a key component of SMSF financial reports, including SARs, and valuations should be completed on 30 June for the year that is being lodged.
“It’s important to have the valuation(s) done early as it’s advisable to have these ready by the time you appoint an auditor. It will make their job easier and it’s likely to reduce the time they take to complete the audit,” it stated.
The update referred to previous ATO guidance that warned an auditor should not replace the individual’s responsibilities as trustee of the SMSF to value assets and the need for a valuation to consider an asset’s market value.
The SMSF regulator stated market value was the amount a buyer of an asset could pay to a willing seller if the buyer and seller dealt with each other at arm’s length, the sale occurred after proper marketing of the asset, and the buyer and seller acted knowledgeably and prudently in relation to the sale.
The update added that a market valuation meant trustees were required to collect objective and supportable evidence in order to support the market value for each asset.
“In some circumstances you’ll need to engage a qualified independent valuer, for example, if your fund transfers a collectable or a personal use asset to a related party,” it said.
“You should also consider using a qualified independent valuer if the value of a fund asset represents a significant proportion of the fund’s value or the nature of the asset indicates that the valuation is likely to be complex or difficult.”
In a separate update, the ATO pointed out newly established SMSFs and those that have missed previous years’ lodgements should have lodged their SAR by 31 October, except in the case of new funds lodging a return through a tax agent.
It reminded late lodgers that any SAR that was more than two weeks overdue without notice to the ATO will have its status changed on Super Fund Lookup to ‘regulation details removed’ until the overdue lodgements were brought up to date, and supervisory levies will also apply.