The ATO has identified several concerns it is having over the auditor review of market valuations for SMSF assets that it says are particularly relevant given the Division 296 tax has now been introduced into the retirement savings system.
In a conversation conducted with SMSF Association head of technical Mary Simmons for the professional body’s Audit Day 2026, ATO SMSF regulatory branch director Kellie Grant indicated audit work relating to market valuations remains the regulator’s second highest issue of concern uncovered in practitioner files.
In particular, it has been found the method by which some auditors are addressing the issue they have with market valuations is incorrect.
“We’re seeing auditors identify market value issues, but rather than [reporting them], they’re actually advising trustees in the management letter to just fix [the problem] next year. Now that’s not acceptable to us,” Grant noted.
“When an auditor identifies a contravention that meets the reporting criteria, they must report it on an ACR (auditor contravention report) and lodge it with the ATO.”
She pointed out this is not the only weakness in audit procedure that has been detected.
“And we’re not seeing Part A valuation or Part B of the [independent auditor’s report] being modified either for any market valuation issues,” she said.
According to Grant, the audit files are demonstrating procedural flaws as well.
“We also note that audit files are not containing sufficient evidence to support market values. There are generally no notes on why the auditor has formed an opinion that the asset has been reported in the financial statements at market value either,” she revealed.
She did, however, acknowledge market valuations compiled by trustees had improved since the ATO conducted a mail-out about the issue.
“Our data shows that after our mail-out many of those funds had updated market valuations in their SAR (SMSF annual return), especially for real property,” she said.
“For property I think 80 per cent of funds had updated their market value in their next SAR, which was really, really encouraging to see, but for unlisted assets it was a little lower.
“So there have now been some real wins in that space, but it still remains a big issue for us.”
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.
Articles by Darin