The ATO will be intensifying its focus on asset valuations as a result of SMSF data it has reviewed recently indicating issues are present with this particular area of fund compliance.
“We are doing some work [on unchanged asset valuations and will be making some] announcements over the next few months. We have identified 40,000 instances of asset classes that have been reported by funds where we are aware the asset values have not shifted between 2020 and 2022,” ATO superannuation and employer obligations director Paul Delahunty told delegates at the Tax Institute National Superannuation Conference in Melbourne today.
“That came as a bit of a surprise to us and I guess we’re at the stage now of just trying to unpack that a little bit and understanding the issue.
“But talking about it publicly and raising awareness around it I think is important.”
According to Delahunty, property was the relevant asset class for a significant number of funds in this cohort.
“We identified 8000 funds that have [the] non-residential property asset class that haven’t changed and that’s involved 1400 auditors in terms of completing audit reports for those funds,” he said.
“Similarly for residential property there were 4000 funds with just over 1000 auditors involved.
“[With the] market changes over the last three years from property, I’d be surprised if someone could make a case that there haven’t been shifts [in these asset classes].
“So that’s of relevant interest for us in terms of where we head [with] risk assessment and engagement with trustees, particularly ahead of the next audit period in May of next year.”
He reiterated the legal obligation trustees must adhere to as part of their responsibilities.
“I think the obligation is quite simple here, being, under the super laws, the fund’s assets need to be valued every year as part of preparing the financial statements,” he said.