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Valuation of Assets


Asset valuation is a key component in preparing meaningful SMSF financial reports. Its importance has also been highlighted with the $1.6 million Transfer Balance Cap and $1.6 million Total Superannuation Balance that went into effect on 1 July 2017.

 
 
General Valuation Guidelines

Valuation Events

A valuation of assets is required to confirm that your SMSF has complied with the relevant superannuation law for events detailed below:

Event Requirements
Preparing the SMSF financial accounts and statements An asset must be valued at its market value.

The valuation should be based objective and supportable data.
Determining the value of assets that support a pension. The pension commencement value counts towards the pension member’s Transfer Balance Cap The market value of the account balance needs to be determined on the commencement day of the pension or, for ongoing pensions, on 1 July of the financial year in which the pension is paid.

The valuation should be based on objective and supportable data.
Determining the market value of assets that is eligible for Transitional CGT relief in the 2016–17 financial year The assets' market values need to be determined on the date that their cost bases are reset (i.e. 30 June 2017).

The valuation should be based on objective and supportable data.
Determining the market value of assets for the purpose of calculating the member’s Total Superannuation Balance Members’ total superannuation balances on 30 June each financial year affect their eligibilities to make certain contributions in the following financial year.

The valuation should be based on objective and supportable data.
Collectables and personal use assets - transfer or sale to a related party Must be made at a market price determined by a qualified independent valuer.
Transfers between SMSFs and unrelated parties A valuation is not required however the transfer must occur on an arm's length basis.

More details can be found on the ATO website here.

Related Parties

A 'Related Party' includes:

  • All members of the Superfund;
  • Associates of Fund members;
  • Standard employer sponsors, which are employers who contribute to your Superfund for the benefit of a member, under an arrangement between the employer and a Trustee of your Fund;
  • Associates of standard employer sponsors.

More details can be found on the ATO website here.

Arm's Length

Investments must be made and maintained on a commercial basis. A test would be whether a prudent person, acting with due regards to his or her own commercial interests, would have agreed to the terms.

 
 
Specific Requirements for Asset Classes

Listed Securities

For the end of financial year reporting, the closing price on each listed security's approved stock exchange or licensed market at 30 June should be used as the market value of the security.

Real Properties

An external valuation of the real property is not required each year. A recent valuation however would be prudent if you expect that the valuation is now materially inaccurate or an event occurred that may have affected the value of the property since it was last valued.

When valuing real property assets for SMSF financial reports, the valuation may be undertaken by anyone (e.g. the Trustees of the Fund, online property valuation services, real estate agents) if it is based on objective and supportable data.

Physical Metals

Generally, for bullion assets held at a storage facility or Mint, a holding statement issued by the facility would be sufficient.

Where an official holding statement is unavailable, a valuation from the Trustees themselves can also suffice provided the valuation of physical metals as at 30 June is based on objective data.

Widely Held Unit Trusts and Managed Funds

The valuation of units in widely held trusts and managed funds should be based on objective data, for example, the published exit price from the Managed Fund or Trust manager. This price is usually available on the annual account statement issued by the Fund or Trust manager.

Collectables and Personal Use Assets

If an SMSF is disposing of a collectable or personal use asset to a related party of the Fund, the transaction must be conducted at the market price as determined by a qualified independent valuer. Besides, the assets should be valued as at the date of the transaction.

More details can be found on the ATO website here.

 
 
Providing Valuation Data to ESUPERFUND

ESUPERFUND holds valuation data for all ASX listed Shares and Securities alleviating you of the responsibility of maintaining these records at financial year end. Where a valuation is required from Trustees (such as for physical metals) we will request this information from you as part of the annual Checklist Process.