SMSF trustees struggling to get annual valuations for property assets as required by their auditor and the ATO can look at other indicators to show if there has been any movement, an SMSF tax expert has stated, but they should be aware they may carry less weight than formal estimates.
Deloitte national SMSF leader Liz Westover said accountants and auditors still had to push trustees to provide annual valuations and where reports from real estate agents were unavailable or not acceptable, other property-related data could be used.
“We had a case recently where we just couldn’t get a new valuation, but had an old valuation and the rates notices for the property,” Westover said at The Tax Institute National Superannuation Conference in Sydney recently.
“We didn’t use the valuation in the rates notices, but they gave us an indication around the increase in the rates over time. So, if we saw that valuation for rates rise by 20 per cent, that might be something to substantiate a 20 per cent increase against the original valuation.
“It is not the gold standard, but sometimes if that’s the best we can do, talk to the auditor and see if that’s something they accept.”
She said trustees may also be able to make a declaration around the value of a property, but should consult with their auditor first about this course of action.
“The trustee may have determined the value hasn’t changed and can say why they think that is the case, and can go to sites like CoreData, which actually says there has been negative movement. So there might be something there that you can use,” she added.
“The thing to be aware of [with online valuations] is the confidence level that comes with those valuations and unless that confidence level is high, your auditor probably won’t accept it.
“Even though the valuation gets spat out, if there’s a low confidence level with that valuation, you’re going to have to go to a real estate agent and get something different anyway.”
In this regard, she cautioned trustees on the use of one-line valuations from an agent as these were being rejected by auditors as sufficient evidence.
“I find that challenging because they are the experts. Why are they having to justify the valuation they use and the trustee must have objective and supportable data?” she said.
“This means there has to be comparative sales being provided with those estimates. It’s not enough to say it’s worth a million dollars. It has to be: ‘I conclude that it’s worth a million dollars because there’s been all these sales in the same area.’”
