Every year, we need to value the assets in your self-managed super fund. While this might seem like just another compliance task, it's actually a crucial part of managing your retirement savings effectively. 

The ATO outlines the reasoning for why this is needed as "It is expected that the investment decisions you make are designed to protect and increase member benefits for retirement. Therefore, you should know the value of the assets in your fund to ensure this occurs." The ATO Guidelines can be found here: Link to the ATO Guidelines for Valuation of SMSF Assets

The Purpose Behind Annual Valuations

Your SMSF is likely one of your most significant financial assets, and knowing its true value is essential for making informed decisions about your retirement. These valuations help ensure your fund is operating within the rules, paying the correct amount of tax, and providing accurate information about your retirement savings.

What Needs to Be Valued

All assets in your fund need current market valuations. This includes properties, shares, term deposits, and any other investments your fund holds. For some assets like listed shares, the valuation is straightforward using market prices. For others, like property or unusual investments, we might need additional documentation or professional valuations.

Why the Tax Office Takes This Seriously

The ATO requires these valuations because they affect several important aspects of your fund. They impact how much tax your fund pays, ensure pension payments are calculated correctly, and help verify that contribution caps aren't exceeded. They're also crucial when members join or leave the fund, or when starting a pension.

Key Times When Valuations Are Critical

While annual valuations are mandatory, they become particularly important in certain situations. These include starting a pension, accepting new members, paying out benefits, or when members are planning their contributions. Having accurate valuations helps avoid problems down the track and ensures everyone in the fund is treated fairly.

Making the Process Manageable

You don't always need expensive professional valuations. Often, we can use practical approaches like real estate appraisals, market listings, or recent sales of similar assets. The key is ensuring the valuations are reasonable and backed by reliable supporting evidence. This is outlined in the ATO Guidelines on valuation. 

What We Need From You

To help manage this process, we just need you to keep us informed about any changes to your fund's assets during the year. This includes new purchases, sales, or significant changes in asset conditions. The more information we have, the better we can ensure your valuations are accurate and compliant.

Looking After Your Retirement Savings

Remember, these valuations aren't just about meeting obligations - they're about protecting your retirement savings and ensuring your fund remains compliant. They help you make informed decisions about your retirement planning and ensure your fund continues to serve its purpose effectively.

If you have questions about how we value specific assets in your fund or need clarification about the valuation process, please reach out to us. We're here to help make managing your SMSF as straightforward as possible.