An SMSF technical specialist has recommended trustees obtain an independent valuation for properties held in their fund, given what the ATO has stated in its guidelines on the subject.
Accurium head of SMSF education Mark Ellem acknowledged the regulator’s guidelines do not actually stipulate trustees must seek a property valuation of this type every year, but pointed out the application of common sense to the recommendation suggests this course of action should be invoked annually.
“It says on the [ATO] website [trustees] don’t need to get an independent valuation by a registered valuer each and every year,” Ellem told attendees of a technical webinar hosted yesterday.
“But don’t stop reading there. If you [read] the next line, [obtaining an independent valuation] is expected where the asset [accounts for] a big part of the fund or hard to value.
“Let’s consider property … from the ATO guidelines saying [trustees] don’t need to get an independent valuation unless the asset [forms] a significant portion of a fund’s investment portfolio.
“My question to everyone is, for an SMSF that owns property, when is [that asset] not a significant portion of the fund’s investment portfolio?
“So why not use an independent valuer [every year]?”
According to Ellem, the cost of this process has been a deterrent for trustees to pursue this compliance path in the past, but he noted this potentially should no longer be the case.
“These days with a lot of the independent valuers [offering their services] online, and depending on the type of property, yes some might be difficult and [trustees] should take that into consideration, but costs for getting that independent valuation are quite low compared to what they were years ago,” he said.
“But again, trustees need to understand there will be those additional costs and tasks they will have to attend to each and every year.”
Darin Tyson-Chan
Editor
Darin is the founder and publisher of Benchmark Media, an independent publishing house whose mastheads include financialobserver, selfmanagedsuper and smstrusteenews. He has been covering the financial services space for over a decade and in this time he has worked for a variety of trade publications. Darin has also written for the Money section published in The Sydney Morning Herald and The Age.
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