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ATO issues reminder on SMSF valuation preparation

The ATO has advised trustees to begin the preparation process for the valuation of assets in the upcoming SMSF annual return.

SMSF Tony Zhang 22 November 2021
— 1 minute read

The ATO said that asset valuation is a key component in preparing SMSF financial reports. It is one of the tasks trustees need to complete before the lodgement of the SMSF annual return (SAR). SMSFs will need to complete a valuation of assets on 30 June for the year the fund is lodging.

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“It’s important to have the valuation(s) done early as it’s advisable to have these ready by the time you appoint an auditor,” the ATO said.

“It will make their job easier, and it’s likely to reduce the time they take to complete the audit.”

When considering the valuation, market value is the amount a willing buyer of the asset could reasonably be expected to pay to acquire the asset from a willing seller, according to the ATO.

This applies if the buyer and seller dealt with each other at arm’s length in relation to the sale, the sale occurred after proper marketing of the asset, and the buyer and seller acted knowledgeably and prudently in relation to the sale.

“You must obtain objective and supportable data to support the market value of each fund asset,” the ATO explained.

“We’ve published valuation guidelines for you to follow that explain our approach to valuation, the terms we use and general valuation principles.

“In some circumstances, you’ll need to engage a qualified independent valuer, for example, if your fund transfers a collectable or a personal use asset to a related party.

“You should also consider using a qualified independent valuer if the value of a fund asset represents a significant proportion of the fund’s value or the nature of the asset indicates that the valuation is likely to be complex or difficult.”  

ATO issues reminder on SMSF valuation preparation
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Emma Ryan

Emma Ryan is the deputy head of content at Momentum Media and editor of the company's legal publication, Lawyers Weekly.

Emma has worked for Momentum Media since 2015 and has been responsible for breaking some of the biggest stories in corporate Australia. In addition, she has produced exclusive multimedia and event content related to the company's respective brands and audiences.

A journalist by training, Emma has spent her career connecting with key industry stakeholders across a variety of platforms, including online, podcast and radio. She graduated from Charles Sturt University with a Bachelor of Communications (Journalism).

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