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The Tax Office cracks down on questionable property valuations for SMSF.

ATO Valuations

The ATO has recently put accountants, auditors and trustees on notice that they need to be more careful in submitting invalid or highly questionable property valuations. Furthermore, that valuations must be done annually to reflect the changing property market.

In a recent Tax Institute National Superannuation Conference, ATO Director, Paul Delahunty clearly alerted all parties to the need for annual valuations saying:

[With the] market changes over the last three years from property, I’d be surprised if someone could make a case that there haven’t been shifts [in these asset classes].”

Furthermore, the ATO are auditing more SMSF tax returns containing residential properties to identify cases where invalid or insufficient data is provided as evidence. In addition, they are inspecting returns where the property value has not changed in accordance with the changing property market and therefore would be treated as bogus or at least questionable.

He reminded all parties about the legal obligation trustees must adhere to as part of their responsibilities.

I think the obligation is quite simple here, being, under the super laws, the fund’s assets need to be valued every year as part of preparing the financial statements,” he said.

This follows on from another warning about the importance of valid property valuations from Assistant Commissioner Kasey McFarlane some time ago saying:

The importance of valuation in SMSFs being supported by objective evidence and data can’t be underestimated in this environment,”

Director Delahunty commented further for trustees to be more careful in the future saying:

So that’s of relevant interest for us in terms of where we head [with] risk assessment and engagement with trustees, particularly ahead of the next audit period in May of next year.”

From early 2023 a new property market assessment service has been used by a wide range of accountants for their SMSF clients to ensure they comply both with audit standards and the ATO requirements as alluded to above. This new service provided by Property Pricer has quickly become accepted in the industry as a more thorough, accurate and highly valid residential property market assessment. Their reports have been accepted by auditors without exception.
Property Pricer’s valuations are not produced by an automated computer system. Their reports are personally prepared using a unique maths-based measurement and calculation tool. This innovative method measures and calculates the value of all the distinctive features of an individual property. Each property accumulates a total property points score, which when calculated with a special adaptation of CoreLogic data, generates a property specific market valuation.

Property Pricer provides businesses and professionals with a full valuation service. Valuation requests are actioned within 3 days, their clients receiving a market value report at a cost effective $79 plus gst or current date or $179 plus gst for retrospective dates.

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