• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

SuperGuide

Superannuation and retirement planning information

  • SuperGuide Premium
  • Account
  • Log In
  • SuperGuide Premium
  • Account
  • Log In
  • How super works
    • Super for beginners
    • Super rules
    • Employers guide to super
    • Super contributions
    • Super and tax
    • Accessing super
    • Super news
    • Women and super
    • Super tips and strategies
    • How-to guides
    • Super quizzes
    • Superannuation Q&As
    • Superannuation glossary
  • Super funds
    • Best performing super funds
    • Super fund rankings
    • Best performing pension funds
    • Pension fund rankings
    • Super fund average returns
    • Super investing strategies
    • Comparing super funds
    • Choosing a super fund
    • Choosing an investment option
    • Super fund fees
    • Insurance and super
    • Super fund profiles
  • SMSFs
    • SMSFs for beginners
    • SMSF administration
    • SMSF checklists
    • SMSF compliance
    • SMSF investing
    • SMSF pensions
    • SMSF strategies
    • SMSF Q&As
  • Plan your retirement
    • Retirement planning for beginners
    • When should I retire?
    • How long will I live?
    • How much super do I need?
    • Will I get the Age Pension?
    • How much will I spend in retirement?
    • Financial advice
    • Retiring overseas
    • Preparing for retirement
    • Retirement planning strategies
    • Retirement calculators and reckoners
  • In retirement
    • Income in retirement
    • Super lump sums
    • Super pensions
    • Age Pension
    • Working in retirement
    • Life in retirement
    • Senior concessions and services
    • Aged care
    • Estate planning
    • Super death benefits

Home / SMSFs / SMSF investing / Asset valuation guidelines for SMSFs

Asset valuation guidelines for SMSFs

March 1, 2020 by Barbara Drury Leave a Comment

Reading time: 3 minutes

On this page

  • Why do assets need to be valued?
  • What is the ATO’s recommended approach?
  • Who can value assets?
  • The bottom line

If you have an SMSF, no doubt you are aware that you need to have your fund’s assets valued regularly to remain compliant with Australia’s superannuation legislation.

While the Australian Taxation Office (ATO) generally accepts SMSF asset valuations that follow the guidelines, it may review valuations as part of its ongoing compliance monitoring. The overarching principle is that assets are reported at market value. So be sure you have evidence to support your valuations as well as documentation of the methods used.

Why do assets need to be valued?

There are important legal reasons why SMSF assets need to be valued regularly, including for:

  • Preparing the fund’s financial accounts and statements
  • Determining the total super balance of fund members (i.e. the balance of their accumulation and retirement phase accounts). Currently, if any super fund member’s balance exceeds $1.6 million, this affects their eligibility:
      • to make non-concessional (after-tax) contributions
      • to use the bring-forward rule for the non-concessional contributions cap
      • for the government’s super co-contribution scheme
      • for the spouse super contributions tax offset
  • Ensuring that members don’t exceed the $1.6 million transfer balance cap on funds that are moved from the accumulation phase to the retirement phase
  • Determining fund member eligibility for carry forward concessional contributions
  • Ensuring any assets are acquired or transferred on an arm’s-length basis (i.e. at market values) to either related or unrelated parties
  • Calculating the market value of the fund’s in-house assets (which cannot be more than 5% of the market value of the fund’s total assets). In-house assets are investments with (or loans made to) fund members or their related parties
  • Ensuring that any collectable or personal use assets of the fund are disposed of at current market values
  • Determining the value of assets that support an SMSF fund member’s pension.
Event/Asset Valuation requirement
Preparing SMSF financial accounts and statements All assets must be valued at market value based on objective data
Calculating total superannuation balances Market valuations need to be done on 30 June each year based on objective data
Collectables and personal use assets when sold or transferred to a related party The market value of these assets must be determined by a qualified independent valuer
Transfers of other assets (excluding collectables and personal use assets) between related or unrelated SMSF parties All acquisitions and disposals must be made at market value based on objective data
Determining the value of assets that support super pensions. The market value of these assets needs to be determined based on objective data on:
  • the day the pension is started
  • on 1 July during any year in which the pension is paid
Testing the market value of the fund’s in-house assets (to ensure they don’t exceed 5% of the market value of the fund’s total assets). The market valuation should be done on 30 June each year and based on objective data
Listed securities (e.g. shares and managed funds) These assets must be valued at their closing price on their approved stock exchange or market (e.g. the Australian Securities Exchange) on 30 June each year
Unlisted securities (e.g. shares in private companies or units in unlisted trusts) To determine market value, fund trustees (or an independent valuer) need to consider the value of the assets in the company or trust, and/or the amount paid for the unlisted security
Real property A valuation is not required each year, but it should be done if market conditions or other circumstances that may affect the property’s value have changed. For example, if renovations have been done to an investment property owned by the SMSF, or if the net income yield of a commercial property has changedThis valuation could be done via an independent appraisal or by researching recent selling prices of similar properties to use as comparable, objective valuation data.

What is the ATO’s recommended approach?

The table below provides the ATO’s guidelines of how different types of SMSF assets should be valued for different types of events.

Who can value assets?

From the ATO’s point of view, it’s the valuation process that’s important rather than the person conducting it. SMSF trustees can generally value fund assets themselves provided they use objective and supportable data as the basis for their valuations. The exception is collectables and personal use assets where the services of a qualified independent valuer must be used.


Advertisement
SuperGuide Premium is ad-free

Qualified independent valuers must be unrelated to any fund members and will likely have formal qualifications and/or professional knowledge and experience in valuing specific types of assets.

Fund trustees have the option of using professional valuers for their other SMSF assets. This may be worthwhile for assets that represent a significant portion of the fund’s total value, or where an accurate market value is difficult to determine.

SMSF auditors may also request an independent valuation of SMSF assets as a part of their normal annual audit. SMSF auditors must be approved by the Australian Securities and Investments Commission (ASIC).

The bottom line

Accurate asset valuation is an essential ingredient in ensuring your SMSF complies with super legislation. SMSF assets must be valued at their current market value, either by the fund’s trustees or independent professional valuers. The exception is the valuation of collectables and personal use SMSF assets, which must be valued by an independent professional. If SMSF trustees choose to value other types of assets themselves, they must base their valuation on objective data.

The information contained in this article is general in nature.

Want to learn more about running an SMSF?

Become a SuperGuide Premium member and access expert guides for SMSFs, on topics such as costs, compliance, administration, investment, borrowing and pensions. Discover valuable super and retirement strategies, the most popular shares, managed funds and ETFs for SMSFs, the latest super rates and thresholds, contributions caps and more.

Includes more than 600 articles, how-to guides, checklists, tips, calculators, case studies, quizzes and a monthly newsletter.

Find out more


Learn more about SMSF investment in the following SuperGuide articles:

The importance of asset allocation

February 10, 2021

SMSF investment rules: Collectables and personal use assets

October 15, 2020

What are the SMSF borrowing rules?

August 6, 2020

How to create an SMSF investment strategy (including example documents)

August 6, 2020

How to achieve genuine diversification in an SMSF

August 3, 2020

How do SMSF retirees invest?

March 14, 2020

10 steps to buying a commercial property and leasing it to your SMSF

February 12, 2020

What on earth is an in-specie transfer?

January 15, 2020

How to invest in infrastructure through an SMSF

October 1, 2019

ETFs: How do I use them and what do they cost?

June 19, 2019

SMSF guide to hedging

May 1, 2019

SMSFs and property: A Super Guide

April 5, 2019

The definitive SMSF guide to franked dividends

April 2, 2019

SMSF investment rules: What every trustee should know

February 15, 2019

Related topics

SMSF investing SMSFs

IMPORTANT: All information on SuperGuide is general in nature only and does not take into account your personal objectives, financial situation or needs. You should consider whether any information on SuperGuide is appropriate to you before acting on it. If SuperGuide refers to a financial product you should obtain the relevant product disclosure statement (PDS) or seek personal financial advice before making any investment decisions. Comments provided by readers that may include information relating to tax, superannuation or other rules cannot be relied upon as advice. SuperGuide does not verify the information provided within comments from readers. Learn more

© Copyright SuperGuide 2009-21. Copyright for this article belongs to SuperGuide Pty Ltd, and cannot be reproduced without express and specific consent. Learn more

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Primary Sidebar

How super works
Super for beginners
Super rules
Employers guide to super
Super contributions
Super and tax
Accessing super
Super news
Women and super
Super tips and strategies
How-to guides
Super quizzes
Superannuation Q&As
Superannuation glossary
Super funds
Best performing super funds
Super fund rankings
Best performing pension funds
Pension fund rankings
Super fund average returns
Super investing strategies
Comparing super funds
Choosing a super fund
Choosing an investment option
Super fund fees
Insurance and super
Super fund profiles
SMSFs
SMSFs for beginners
SMSF administration
SMSF checklists
SMSF compliance
SMSF investing
SMSF pensions
SMSF strategies
SMSF Q&As
Plan your retirement
Retirement planning for beginners
When should I retire?
How long will I live?
How much super do I need?
Will I get the Age Pension?
How much will I spend in retirement?
Financial advice
Retiring overseas
Preparing for retirement
Retirement planning strategies
Retirement calculators and reckoners
In retirement
Income in retirement
Super lump sums
Super pensions
Age Pension
Working in retirement
Life in retirement
Senior concessions and services
Aged care
Estate planning
Super death benefits
Advertisement
Compare super funds

Kickstart your retirement planning

Try our free 7-day email series on planning your retirement, including how much super you’ll need, when you can retire and a quiz to test what you’ve learned.

Learn more

Footer

Important: Disclaimer

All information on SuperGuide is general in nature only and does not take into account your personal objectives, financial situation or needs.

You should consider whether any information on SuperGuide is appropriate to you before acting on it.

If SuperGuide refers to a financial product you should obtain the relevant product disclosure statement (PDS) or seek personal financial advice before making any investment decisions.

Learn more

About SuperGuide

SuperGuide is Australia’s leading superannuation and retirement planning website. Learn more

Superguide Pty Ltd ATF Superguide Unit Trust as a Corporate Authorised Representative (CAR) is a Corporate Authorised Representative of Independent Financial Advisers Australia, AFSL 464629

  • Contact us
  • Advertise on SuperGuide
  • Careers

Before using this website

  • New to SuperGuide?
  • Terms and Conditions of Use
  • Financial Services Guide
  • Privacy Policy and Privacy Collection
  • Copyright Policy
  • Editorial Policy and Complaints
  • Disclaimer

  • SuperGuide Premium
  • Subscriber feedback
  • Sitemap