SMSF asset valuations and the contribution caps
Asset valuations and the contribution caps are both contentious issues, with many SMSFs failing to regularly update their asset valuations and some auditors turning a blind eye. And SMSF auditors who do the wrong thing in relation to valuations may also find themselves facing action by ASIC.
The new contribution caps require that assets of the fund, as at 30 June 2017, must be properly valued to determine the fund’s total asset value.
If assets are overvalued this may tip a member over their cap, and if the ATO considers the assets have been deliberately undervalued to keep a member under the cap, then it has the power to take a range of penalty actions.
Generally speaking, assets do not need to be valued by a qualified independent valuer except as indicated below — however this does not mean the trustees cannot just determine any value they like. It must reflect a fair market value of the asset at the time of the valuation, and documentation as to how the valuation was determined should be kept by the fund, so it can provide this to its auditor as well as to the ATO should it seek proof of how valuations were determined. […]