According to the ATO website, the form is designed to assist with the process of requesting services from a valuation consultant and to promote “more targeted solutions that align with the tax law approaches and requirements”.
The form contains instructive text concerning what information valuers may require and optional text that can be included depending on what services are being requested.
DBA Lawyers director Daniel Butler told SMSF Adviser that the ATO has most likely developed the instruction form to generate greater consistency across valuations and to “put valuers on notice that they may be called to account by the ATO”.
“If you look at this guide, I don’t think it’s very friendly for an adviser because under paragraph two there’s a lot of information you have to fill out and a lot of valuers already have their own forms,” said Mr Butler.
“Why would you want to go against the valuer’s own instruction form? You’d rather fill out the [valuer’s] instruction form.”
This second paragraph also explains that the valuation adviser report, prepared as a result of the engagement, may be submitted to the ATO and used in the administration of tax affairs, Mr Butler said.
The paragraph also notes the report may be made available to other government agencies and departments and presented to a court of tribunal in the future, he said.
The form states the client “is available to provide assistance to the valuer and acknowledges the valuer’s right to refuse to provide opinion or report if not provided with the information, explanation or the assistance required”.
“I think if you knew you were in a contentious matter with the ATO then certainly you’d want to be right up front about that with the valuer,” said Mr Butler.
“Will the typical transaction for an SMSF involving business real property be called up by the ATO? Well maybe, but why do you have to preface all that with the fact that you’ve tried to really put it all up front with the valuer?”
Mr Butler said valuers “don’t need to be told how to do their job” and that “a proper professional is not just going to lend their name to a valuation just to favour a client because ultimately they know they could be sued”.
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The whole idea of the new valuation requirements is a waste of time. The old rules included everything necessary. Many small businesses have their business as their retirement asset. An annual valuation of this would make more sense than an annual valuation for a $5k piece of art in a $1m fund, as the business value is a massive % of a person’s retirement plan, and hard for the owner to evaluate. Government hasn’t legislated this though as the large super fund lobbyists didn’t push for it. All that’s happened is a range of different assets have been moved from SMSFs to members own names. The members have the same set of assets, they’ve just switched with entity owns which asset.