Valuations a burden for SMSFs

Self-managed super fund (SMSF) trustees should not be forced to do a full valuation on direct property holdings every year, according to the Self-Managed Super Fund Professionals' Association of Australia (SPAA).

As part of the Government's Stronger Super reforms, it was recommended the Australian Taxation Office should, in consultation with industry, publish valuation guidelines to ensure consistent and standardised valuation practices; and also that the Government should legislate to require SMSFs to value their assets at net market value.

But SPAA chair Sharyn Long raised concerns that performing a full valuation could place an onerous and unnecessary burden on SMSF trustees, potentially adding up to $10,000 in extra costs per year.

All stakeholders can agree that property holdings should be recorded at market value, but there is an issue where it becomes cost prohibitive, she said.

Long proposed that full valuations be done every three years or when required due to market movements, along with an annual review or market appraisal.

It is more crucial for an Australian Prudential Regulation Authority (APRA) regulated fund to have constantly updated values for holdings compared in order to know how to credit members, compared to a SMSF trustee having constantly updated valuations within a fund, she said.

SPAA chief executive Andrea Slattery also raised concerns that if off-market transfers are banned for SMSFs, as proposed by Stronger Super reforms, it would create an uneven playing field for different types of funds.

"We believe quite strongly that the SMSF market would be discriminated against if off-market transfers were brought on-market," she said.

The measure should not be adopted at all, but if it is, then small APRA regulated funds should also be included, she said.

If there are concerns that some trustees are improperly adjusting the value and timing of off-market asset transactions to maximise tax benefits, then the time frame for such transfers to be completed could be cut to five business days rather than 30 to 60 days, she said.