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Dec 16, 2022

Valuations (after SMSFAAA webinar)

in SMSF Technical Forum

Good morning.

I finally got around to watching the recent webinar with the gentleman from the ATO discussing the latest things they will be smashing auditors on. The part that concerned me is valuations. He stated (please correct me if I am wrong) relying on evidence such as comparable property sales, rental yield, or even kerbside valuations by a real estate agent is not acceptable. In cases of rental yield this would be acceptable if accompanied by other evidence. Why is a real estate agent not someone with knowledge of what a property may sell for?

The ATO themselves have said:

External valuations are not required each year and they can be prepared by anyone.

Valuations may consider:

Value of similar properties.

Value paid for property in an arm’s length market.

Independent appraisals.

Has property been improved since last valuation.

For commercial properties net income yields.

Online services.

Real estate agent valuation is acceptable.

So my questions:

Is this a change in attitude? Are they pushing for full valuations every year? What evidence do you accept in your audits?
What is our job, as auditors, if the substantiation is not sufficient by these new standards? The property HAS been revalued, it is just the accuracy of that which "may" be in question, despite evidence being presented according to the above ATO requirements. Seems more a Part A qual than an ACR?

Thanks for any input.

Matt

1 answer0 replies

Comments (1)

THE AUDITORS INSTITUTE

Dec 19, 2022

Hi Matt

The ATO updated their view on valuations on 4/11/2022 and it is found at:

www.ato.gov.au

Valuation guidelines for self-managed super funds

What SMSF trustees need to consider when valuing assets for superannuation purposes.

They are not pushing for valuations each year (unless a significant event has occurred).

The ATO will:

"generally accept your determination of an asset's value, as long as:

it doesn't conflict with this guide or Market valuation for tax purposes
there's no evidence that a different value was used for the corresponding capital gains tax event
it was based on objective and supportable data."

The ATO does states that "an independent appraisal from a real estate agent (kerbside)" can be used to determine the value of a property.

A recent article re this topic by ASF Audits can be found at:

Thanks

SMSF AAA