SMSF trustees should accurately report changes in the value of assets held by their fund as the ATO will be checking they have done so as part of the lodgement of this year’s SMSF annual returns (SAR).
Heffron SMSF technical and education services director Leigh Mansell said after identifying more than 16,000 SMSFs where values were unchanged over a three-year period, the ATO has communicated by letter it will review the SARs of those funds and trustees must ensure their financial reporting is accurate by the 31 October deadline for lodging returns.
“If you received one of these letters, then you potentially have a problem. The ATO is worried that trustees are not valuing their assets to market at the end of each financial year and the particular asset classes that were targeted were residential and commercial property, unlisted shares and unlisted trusts,” Mansell explained.
“What should you do if you have a fund that received one of those letters? Essentially the trustee of that fund is on notice and the ATO have said they’re going to be monitoring the fund’s next SMSF annual return.
“Trustees need to make sure that the assets are reported at market value when they’re next preparing their fund’s financial statements and make sure they’ve got objective and supportable evidence to justify the values that have been used.
“If the values don’t change in the next return that is lodged, it may be that the ATO then reviews that fund to try and work out what’s going on. It may be perfectly okay, maybe the valuation of these assets hasn’t changed, but the ATO is going to be looking for evidence of that.”
According to Mansell trustees cannot assume they have complied with their asset valuation responsibilities simply because the fund’s auditor has not filed a contravention report with regard to these circumstances.
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