SMSF trustees who may be facing an ATO challenge regarding the valuation of an asset in their fund should check any underlying assumptions made by the regulator and be prepared to demonstrate why they believe it is mistaken, a technical specialist has stated.
MLC Tech Connect senior technical services manager Julie Steed said the ATO’s response to a contravention report for Superannuation Industry (Supervision) Regulation 8.02b, which requires trustees to value assets at market value, would depend on the nature of the asset and its view could be countered by the trustee.
“If we are looking at a large property that makes up a substantial portion of the assets of the fund and it’s leased to a related party, it’s probably got red flags going off everywhere,” Steed said at the recent ASF Audits Technical Seminar 2025 in Melbourne.
“If it is a comic-book collection that it was hard to value and makes $10,000 worth of a $4 million fund, I don’t think the ATO would have a red flag.
“However, I have seen instances where the ATO has their own values and they do have the capacity to send out valuers to value your assets, but if you get an ATO valuation report, read it carefully.
“I had a fund where they valued a rural hotel, a pub, but had the wrong floor plans. So sometimes the ATO valuers make mistakes.”
She noted valuations the ATO may have issues with would have been lodged as part of an auditor contravention report, which can lead the regulator to revalue it using another methodology, but trustees can prevent this by marshalling all the evidence they relied upon for their figure.
“You can cut it off at the knees when they come and question your valuation by saying: ‘Here’s my inch-thick file which I’m going to email to you with every piece of evidence that I’ve considered and this is why I’ve arrived at this valuation,’” she added.
“Make sure it’s apples and apples being compared and not that they are looking for the recently renovated bathroom and kitchen where there is the 1972 kitchen and bathroom, and also make sure you use comparable sales. If a flat is a two bedroom, two car park, don’t compare it with a two bedroom, one car park.”
