SMSF managers must prepare annual financial accounts and statements, including a valuation of any property assets, to confirm a fund has complied with ATO regulations and relevant super law.

When it comes to valuing real property assets, the two most important considerations for trustees are the valuation approach adopted and the timing of the assessment. Having objective and supportable data demonstrating market value and the valuation methodology used will enable compliant reporting. Engaging a qualified valuer when valuing assets in an SMSF helps ensure the evidence meets auditor expectations.

The ATO recommends funds consider the use of a qualified independent valuer if:

• The value of the asset represents a significant proportion of the fund's value.
• The nature of the asset indicates that the valuation process is likely to be complex or difficult.
• A significant event, such as a macro-economic event, market volatility or a natural disaster, has occurred (COVID-19).

A common challenge encountered when providing reporting for a property asset held in an SMSF is gaining access to current and relevant data to demonstrate market value comparison. The cost and timing associated with obtaining third-party advice in relation to this task is often the biggest hurdle.  At Acumentis, our market-leading valuation management software contains millions of records. Our valuation team has immediate access to the most up-to-date sales information and market data, allowing the efficient provision of a valuation report or property assessment.

Acumentis provides the detailed market data and methodology required to comply with ATO reporting and super law requirements. Our national team of registered valuers brings a wealth of expertise, local and asset-specific knowledge, and insights to the process that may be missed if using other third-party providers. 

Acumentis delivers SMSF assessments in a timely and cost-effective manner. Assessments are delivered within 2 business days from receipt of a compliant engagement form, which can be completed online.

The ATO requires a valuation undertaken by:

• registered valuer
• professional property valuation service provider
• member of a recognised professional valuation body
• person without formal valuation qualifications but who has specific experience or knowledge in a particular area

For SMSF reporting, Acumentis created an innovative product during the early stages of the COVID-19 pandemic in 2020, the SMSF Restricted Property Assessment.

To complete the SMSF Restricted Property Assessment, a qualified Acumentis valuer conducts a contactless remote desktop assessment that does not require physical access to the property. Thorough analysis using real-time sales and market data ensures SMSF trustees are provided with an accurate and timely ATO-compliant report.

Restricted assessment (desktop) — when it fits

• Most residential properties and uncomplicated commercial assets
• Uses recent comparable sales, sales history and other market data
• No physical inspection; efficient turnaround and lower cost
• Clear conclusion to help trustees determine market price at the valuation date, consistent with a willing buyer/willing seller test.

Formal property valuation report — when to step up 

• Formal independent valuations are required for complex/specialised commercial or rural assets, limited local evidence, or heavy fund weighting
• When a property is subject to a transaction or dispute, etc.
• Includes method selection (valuation method), comparable sales analysis, assumptions and relevant factors
• Prepared by a qualified independent valuer with documented independence and credentials
• Provides a defensible, determined property value to satisfy annual SMSF audit requirements

Engagement form, property address and ownership details, lease documents and outgoings (if applicable), recent photos or a plan (if available), notes on any significant event during the year and your required valuation date. If you’re relying on a previous valuation, include fresh evidence (e.g. recent comparable sales), so your auditor has sufficient evidence.

Where a related party occupies the asset, we assess market rent using comparable properties and current market data. We then reconcile value using the most suitable valuation method for the asset and lease profile. Your SMSF auditor may also request the lease, incentive details and any rent reviews as evidence to support the conclusion.

Not necessarily. We can value at any effective date required. For year-end reporting, trustees usually adopt 30 June. If you’re using a previous valuation, you’ll need sufficient evidence that it still reflects market value at the reporting date, or we can refresh the assessment efficiently.

Yes. We coordinate property portfolios across locations and asset types, aligning valuation dates and evidence standards. Whether you hold residential and commercial properties or mixed real property assets, we can streamline workpapers for your annual SMSF audit.

Retain the signed report or assessment, summary of comparable sales data, the valuation date, methodology and key relevant factors. Include leases and outgoings (if any), notes on significant events and any supporting market materials used to determine market value. This demonstrates that conclusions are based on objective and supportable data and keeps audits smooth.

While council rates valuations may have some relationship to market value, they are primarily undertaken for rating purposes using broad mass appraisal techniques and may not reflect the specific characteristics or current market value of an individual property.  As they generally do not provide the methodology, supporting evidence or market analysis required under ATO valuation guidelines for SMSFs, auditors most likely would not consider this sufficient evidence to support an asset's market value.

Typically, an appraisal or letter from a real estate agent indicating the market value of a property may not meet ATO guidelines for SMSFs. A compliant report should detail the valuation methodology, include supporting data like comparable property prices and specify the adopted figures for both the market and rental valuations. Ensure the provider is familiar with ATO guidelines and can produce a compliant report.

See the legislation update above for how ‘Division 296’ affects your fund's 30 June valuation.

This question involves general valuation principles. For unique assets, we expand the search to other areas and apply suitable locational adjustments. This also applies to specialised commercial assets, using rates and yields from various regions to provide insights for adjustment. Choosing the appropriate valuation method based on the asset and evidence is crucial. If Direct Comparison is limited, methods like Capitalisation or Summation Approaches can be used to establish market value.

A professional valuer can provide retrospective valuations for an asset on multiple past dates, including those beyond three years ago. If you have specific requirements, it’s advisable to contact your valuer, as they can typically accommodate a wide range of needs.