The ATO says it has observed an increase in regulation 8.02B breaches and is warning SMSF trustees that one of their key responsibilities every income year is valuing their fund’s assets at market value.
Before lodging an SMSF annual return (SAR), a fund’s SMSF auditor is required to check that assets have been valued correctly and assess and document whether the basis for the valuation is appropriate.
Where the auditor determines the trustee has not provided sufficient appropriate audit evidence to them to confirm the fund’s assets have been correctly valued at market value, a regulation 8.02B contravention may have occurred and the auditor may be required to notify the ATO about this.
The regulator said it is increasingly using data to identify and deal with risks and continues to place compliance scrutiny on funds that have maintained the same values on reported SMSF assets in their annual return.
It added that it is concerned these funds may not be meeting their legal requirement to value and report their assets at ‘market value’ every year.
Trustees are reminded that if their asset valuations fail to meet the valuation requirements, the fund and members may have additional tax to pay, and they could be liable for administrative penalties.
Additionally, as part of the annual audit process, trustees must provide objective and supportable evidence to their SMSF auditor to support the valuation of the fund assets. This includes providing all relevant documents specifically requested by an auditor.
For more information, go to SMSF valuation guidelines.
