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SMSF asset valuations, ATO provides COVID-19 concessions

SMSF asset valuations, ATO provides COVID-19 concessions. Every year, trustees of SMSFs have to ensure that the fund’s assets contained in the financial statements and accounts are at market value for the associated audit.

COVID concessions SMSF asset valuationsDue to COVID-19 impacts on the 2020 and 2021 financial years, the ATO has provided a concession for trustees of SMSFs in relation to valuation evidence. It will allow auditors to lodge an Auditor/actuary contravention report with reasons as to why to the trustee was unable to obtain the appropriate evidence. If the ATO deems the reason to be COVID-19 related, no penalties will apply.

SMSF asset valuations, ATO provides COVID-19 concessions. One of the many responsibilities of being a trustee for an SMSF is preparing financial statements and accounts for the SMSF every year. As a part of this reporting process, the trustee is also required to ensure that the fund’s assets contained in the report is at market value as per the various superannuation regulations.

According to the ATO, when valuing real property that represents a significant portion of the fund’s value, it is prudent for the trustee to use a qualified independent external valuer. Although an external valuation is not required each year, if the trustee believes that the current valuation has become materially inaccurate, or the property has become affected by external events (ie natural disaster, COVID etc), a new valuation should be obtained.

Real estate agent appraisals stating what the property is likely to sell for based on sales in the areas, without listing details of those sales is not considered to be sufficient and appropriate on its own. Documentation that the ATO considers to be acceptable evidence for substantiating the market value of real property other than an independent external valuation include:

  • independent appraisals from a real estate agent (kerb side);
  • contract of sale if the purchase is recent and no events have occurred to the property that could materially impact its value since the purchase;
  • recent comparable sales results;
  • rates notice (if consistent with other evidence on valuation); and
  • net income yield of commercial properties (not sufficient evidence on their own and only appropriate where the tenants are unrelated).

SMSF asset valuations, ATO provides COVID-19 concessions. SMSF trustees are then required to provide these objective and supportable evidence to their auditor. The ATO notes that the evidence should also support a market value for the property as close as possible to the end of the financial year, particularly where the market is potentially volatile. Remember, the auditor is not responsible for determining the market value of the fund’s assets, they are only required to obtain sufficient evidence to form an opinion about whether the SMSF has complied with various super regulations.

Where an auditor deems there not to be sufficient or appropriate evidence to enable them to form an opinion of whether the asset was valued at market value, they must modify their audit report and consider whether an Auditor/actuary contravention report (ACR) should be lodged.

SMSF asset valuations, ATO provides COVID-19 concessions. Due to the COVID-19 impacts on the 2020 and 2021 financial years, the ATO has provided a concession for trustees of SMSFs in relation to valuation evidence. It notes that where a trustee has difficulty obtaining valuation evidence, auditors should still consider modifying Part B of the audit report and lodge an ACR if necessary. In addition, auditors should provide reasons on the ACR as to why the trustee was unable to obtain the appropriate evidence.

SMSF asset valuations, ATO provides COVID-19 concessions. Once the auditor lodges their report, the ATO will then determine whether the difficulty in obtaining evidence was due to the impacts of COVID-19. If it is satisfied that COVID-19 was the cause, then the contravention will not result in penalties, and the trustee will receive a letter to ensure that they comply with the valuation guidelines for the next audit. Otherwise, penalties may apply.

SMSF asset valuations, ATO provides COVID-19 concessions, need help with your SMSF?

SMSF asset valuations, ATO provides COVID-19 concessions. If you need help this year with your SMSF, whether it be obtaining valuations, preparing financial statements or accounts, or even finding a new auditor. We have the expertise to ensure that everything is done to a professional standard. Don’t get hit with penalties, contact us today.

Hunter Partners are Accountants, Tax Agents and Financial Planners. We can assist you with all aspect of your accounting, tax and financial planning requirements, call Hunter Partners on (07) 4723-1223.

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