ATO to scrutinise valuations for overseas property, private trusts

The ATO will be closely reviewing the valuations for assets such as private trusts and overseas property where trustees are close to the $1.6 million balance cap, a technical expert has warned. 

SuperConcepts executive manager of SMSF technical and private wealth, Graeme Colley, says assets such as private unit trusts and property syndicates have always been difficult to obtain asset values on.

“The valuations of those assets has always been difficult but this year those trusts need that information before the superannuation fund lodges its tax return, otherwise the members won’t have an accurate assessment of what their balance is,” Mr Colley said.

There is currently no statutory compliance requirement for the syndicates of private trusts to prepare their accounts on market basis, and they are sometimes prepared on a cost basis.

“They may adjust them when someone actually sells or buys units in the unit trusts,” Mr Colley said.

“That makes it difficult when you’ve then got the auditor asking the trustee of the unit trust, or the administrator of the unit trust, what the market value is of it, and trying to coax it out of them can be a bit of a challenge.”

The auditor ends up having to qualify the accounts, and it’s up to the ATO as to whether that becomes a serious compliance issues and if the trustee is penalised.

Mr Colley said with the introduction of the $1.6 million transfer balance cap and the $1.6 million restriction on non-concessional contributions, the ATO could be more closely analysing valuations for these assets.

“If members don’t have an accurate assessment of what their balance is and the ATO comes along, which I suspect they will where the balance is around the edges, the trustee [could face penalties],” he said.

“Where someone’s got around the $1.6 million, I’m sure the ATO will have a close look at how those balances have been valued.”

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