Valuations a ‘critical’ part of audits this year, SMSFs told

“The auditor is going to want to see that assets are at market value. There are a whole range of valuation considerations. Is property listed in the books as what it’s actually worth at 30 June? Shares may be relatively straightforward, but more exotic assets may need to be revalued in this particular market,” Mr Ali explained in a SuperConcepts podcast with Phil La Greca.

Mr La Greca said asset values have a knock-on effect with other aspects of the fund.

“If you can’t get the value right, then that means a lot of other things can’t be correctly calculated. So, for example, this year’s pension level,” Mr La Greca said.

Mr Ali said while SMSF trustees may not consider market valuations to be a big deal, he pointed out that it does have a significant impact on the level of pension payment they receive.  

“It also impacts other things like estate planning or retirement decisions. The market values impact what we’re going to give people through some kind of estate planning mechanism,” he noted.

He also pointed out that it may have an impact on the way that exempt current pension income is calculated.

“We could have a situation whereby in previous years the fund would have come under a different regime for calculating exempt current pension income,” he explained.

“We’ve got that $1.6 million disregard small fund assets rule. Potentially, a fund could have been subject to the disregarded small fund assets rule pre-COVID, and now the fund has dropped so significantly to the point where it’s not subject to the disregarded small fund assets rule which impacts the fund’s calculation for exempt current pension income.”