Warning on SMSF asset valuations
The ATO has issued a warning to trustees of SMSFs about sloppy valuation practices. Over 16,500 SMSFs have reported assets at the same value for three consecutive years.
The ATO has issued a warning to trustees of SMSFs about sloppy valuation practices.
ATO data analysis has revealed that over 16,500 self managed superannuation funds (SMSFs) have reported assets as having the same value for three consecutive years. With many of these assets residential or commercial Australian property, you can forgive the ATO for being incredulous.
The value of assets in your SMSF impacts on member balances and by default, can impact the amount you can contribute, ability to segregate assets for exempt current pension income, the work test exemption and access to catch-up concessional contributions.
Valuing at market value
Each year, the assets of your SMSF must be valued at 'market value' and evidence provided to your auditor. Broadly, market value is the amount that a willing buyer of the asset could reasonably be expected pay to acquire the asset from a willing seller assuming that the buyer and seller are dealing at arm's length.
Valuing real property
Commercial and residential real estate does not need to be valued by an independent valuer. But, if there have been significant changes to the property, the market, or the property is unique or difficult to value, it is a good idea to have a written independent valuation.
Valuations and the impending Division 296 tax on super earnings
The value of assets will be particularly important for those with super balances close to or above the $3m threshold for the impending Division 296 tax on fund earnings.
- Over 16,500 SMSFs reported assets at same value for 3 consecutive years
- SMSF assets must be valued at market value annually
- Accurate valuations critical for Division 296 tax calculations
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