As the Federal Government moves closer to implementing the controversial Division 296 tax, SMSF trustees with balances over $3 million are firmly in the spotlight.
It’s now more important than ever for trustees to get serious about how property and other assets are valued, ensuring that what’s submitted is accurate, defensible, and up to date.
Set to take effect from 1 July 2025, the new tax will apply to SMSF balances above the $3M threshold, and it targets unrealised gains. That means even if an asset hasn’t been sold, tax may still apply to its increase in “reported” value.
Why This Matters If You Own Property in Your SMSF
Property makes up a large portion of many SMSF portfolios, so this policy change could have real financial implications for members holding residential, commercial, rural, or agribusiness property.
At Acumentis, we’ve already noticed a surge in SMSF-related valuation requests. Some trustees are choosing to transfer property out of their SMSFs, which means they need legitimate up-to- date, market-based valuations for stamp duty calculations to support those transactions. Others are seeking updated valuations to understand their potential exposure to the upcoming tax.
The ATO Has Its Eye on (Unlisted) Property Assets
It’s widely expected that the ATO will ramp up its scrutiny of unlisted SMSF assets, particularly property, as the implementation date approaches. Valuations as at 30 June 2025 will set the baseline for measuring future gains or losses, making this an important financial milestone for many funds.
Valuation Manipulation Is Risky Business
There’s growing concern among SMSF auditors around trustees attempting to manipulate valuations. Some fund members are seeking ultra-conservative valuations to remain under the $3 million threshold. While others who are over the $ 3 million may seek inflated valuations before 30 June 2025 to establish a higher baseline before the tax is introduced.
Trying to game the system like this is risky business. Unrealistic valuations could raise red flags with auditors and regulators alike. There’s already speculation that the ATO may tighten valuation requirements as part of its enforcement efforts across the system.
Objective, Defensible Valuations Are Essential
While current ATO guidance allows for flexibility in who performs a valuation (as long as it’s based on objective, supportable data) the nature of Division 296 means professional, independent valuations are now a preferred option.
A real estate agent’s estimate or a trustee’s own assessment may no longer suffice. The practice of using Automatic Valuation Models (AVMs), which are especially prevalent in the residential property space, may no longer be viable without the oversight of a qualified professional. With valuations now carrying direct tax implications under the new $3 million cap, they must be current, defensible, and well-documented. Outdated or unrealistic valuations, whether too high or too low, could trigger additional scrutiny from auditors or the ATO. Auditors need to be confident in the supporting documents they’re signing off on, hence, a robust, professionally supported valuation is essential. At Acumentis, we strongly recommend engaging qualified, registered valuers — particularly for asset transfers, compliance market value reporting, and tax planning.
What Trustees Should Do Now
With the proposed changes looming, SMSF trustees should:
- Review all SMSF-held property assets and ensure valuations are current and well-documented. This will set baseline for future taxation and show capital growth since the last valuation.
- Avoid the temptation to manipulate figures, the ATO has flagged increased enforcement, and audit qualifications could have long-term consequences.
- Plan early for end-of-financial-year valuations, especially if your fund is near or over the $3M threshold.
Trusted Valuation Support
Acumentis provides national property valuation services, backed by industry expertise, rigorous compliance, and deep market insight.
Our timely, ATO-compliant SMSF property valuations are available for residential, commercial, rural & agribusiness property across Australia.
Whether you’re planning a transfer, responding to auditor requests, or simply seeking clarity ahead of Division 296, our team can help ensure your SMSF property valuations are accurate, compliant, and defensible.
Request a Valuation Now to get ahead before 30 June 2025.