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ATO pushes trustees’ valuation responsibilities

ATO; trustee; valuation

The ATO will accept asset valuations from trustees but has reminded them of their responsibilities in accurately sourcing that information.

The ATO will accept a trustee’s valuation of an asset where it is based on objective data, but has emphasised trustees are responsible for providing that information.

The regulator made a statement as a part of recently released guidelines for SMSF trustees for valuing their assets, indicating the onus for providing a correct valuation remained with trustees.

“We may review a valuation as part of our compliance processes. As part of this review you may be asked to provide evidence of the valuation method that has been used to allow us to decide whether to accept the valuation or not. This evidence would include documentation of the valuation method used,” the ATO said.

“If we conclude that the most appropriate valuation method has not been used for any of the assets, it will not be accepted and the most appropriate valuation method will be applied to determine an amended value.”

The guide also outlined the role of a valuer or any person who undertakes the valuation process, highlighting that the ATO was primarily interested in the valuation process.

“It is usually the valuation process undertaken rather than who conducted it that governs the acceptability of a valuation. In all cases the person who conducts the valuation must base their valuation on objective and supportable data,” it said.

The guide noted a valuation may be undertaken by a person who is a registered valuer, a professional valuation service provider, a member of a recognised professional valuation body or a person without formal valuation qualifications but who has specific experience or knowledge in a particular area.

The ATO, however, recommended the use of a qualified independent valuer where the value of the asset represents a significant proportion of the fund’s value.

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