Essential Asset Valuation for SMSF Trustees: A Yearly Requirement
Ensure accurate market value assessments to streamline your SMSF audit and annual return—learn how to provide the necessary evidence and avoid potential delays
One of the many responsibilities SMSF trustees have every income year is valuing their fund’s assets at market value.
The market value of an asset is the amount that a willing buyer and seller would agree to in an arm’s-length transaction. These valuations will be used when preparing the fund’s accounts, statements and SMSF annual return (‘SAR’).
Asset valuations will be reviewed by an approved SMSF auditor as part of the annual audit prior to lodgment of the SAR. The auditor will check that assets have been valued correctly and assess and document whether the basis for the valuations is appropriate given the nature of the asset. The auditor is not responsible for valuing fund assets.
Taxpayers should ensure that they have their valuations done before going to the auditor.
It is the responsibility of the SMSF trustee to provide objective and supportable evidence to their auditor for the valuation of the fund’s assets, including all relevant documents requested to prevent delays in auditing the fund. Failure to do so could result in a potential late lodgment of their annual return or a contravention if mistakes have been made.
SMSF trustees should start researching now to find what type of evidence they need to support the valuation as this can take time. For some asset types valuations must be undertaken by a qualified independent valuer.
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