Since 7 August 2012, a mandatory requirement by regulation came into force, and now aligns SMSFs with accounting principles. Consequently, for the 2012-13 and later financial years, SMSF trustees are required to use market values for the purpose of preparing year-end financial accounts and statements.

Why assets need to be valued at market value

Asset valuation is one of the most significant matters SMSF trustees need to address to confirm compliance with all relevant laws and regulations.

In light of the SIS act and SIS regulations, a market valuation is required for:

  • Preparing the annual financial accounts and statements of the fund
  • Acquiring assets from a related party of the fund
  • Investments made and maintained on an arm’s length basis
  • Determining the value of assets that support a member’s super pension;
  • Determining the market value of an SMSF’s “in-house” assets as a percentage of the value of all assets in the fund;
    • SMSF trustees must not invest in in-house assets that cause the total in-house assets to exceed 5% of the market value of the fund’s assets at the time of investment
    • If an SMSF held in-house assets, all fund assets must be valued at their market value on 30 June of the income year the in-house asset(s) are held in order to ascertain if a breach of the in-house asset rules has occurred
  • Selling certain collectibles or personal-use assets to a related party of the fund.
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