Why valuations matter more than ever

The ATO has repeatedly stated that trustees must value all fund assets at market value every year when preparing the fund’s financial statements and annual return. Auditors must also obtain sufficient evidence to verify the valuation or they are obligated to modify their audit opinion and potentially lodge an auditor contravention report. 

Funds that fail to update values annually or rely on weak evidence are increasingly being detected through data analytics. In fact, recent ATO communications highlighted a cohort of ~16,500 SMSFs that reported identical values for certain assets over multiple years, prompting targeted reviews and education campaigns.

With Division 296 now passed by Parliament in early March 2026 and taking effect from 1st July 2026, valuation accuracy becomes even more important. Under the final law, individuals with a total super balance above $3 million will incur an additional 15% tax on earnings attributable to the portion of their balance above that threshold, and those with balances above $10 million face a further 10% (total 25%) on earnings attributable to the excess above $10 million. Importantly, both the $3m and $10m thresholds will be indexed over time. 

Because Division 296 calculations rely on accurate measurement of realised earnings and member balances, trustees with property-heavy SMSFs must ensure that valuations, particularly those used at 30th June 2026 and 30th June 2027, are defensible, well-evidenced, and prepared using objective market data. Weak evidence or outdated values may materially affect tax outcomes, especially for members near or above the new thresholds.

If your SMSF holds property, 2026 is shaping up to be a critical year for valuation accuracy and audit defensibility. The ATO continues to sharpen its focus on stagnating asset values, insufficient evidence, and valuation approaches that fail to meet the “objective and supportable” standard required under SIS Regulation 8.02B.

To stay ahead, trustees and advisers need to take a proactive approach, ensuring property valuations are robust, well-supported, and capable of withstanding increased scrutiny while protecting member outcomes.

Should you seek the services of a valuer to assist with this, please do not hesitate to call Paul on 0417 567 747, who can place you in contact with one of his trusted associates who have the right expertise.

 

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