The SMSF 30 June property valuation checklist.

What the rules actually require

Regulation 8.02B of the SIS Regulations requires fund assets to be valued at market value when preparing accounts and statements. The ATO expects trustees to use objective and supportable data. The auditor, separately, must obtain sufficient appropriate evidence that the reported value is reasonable — and it is the auditor, not the trustee, who decides whether what they have been given is enough.

Note what the rule does not say: it does not mandate a full independent valuation by an external valuer every single year. It mandates market value supported by objective and supportable evidence, and s35B(2) of the SIS Act requires the accounts to reflect it. For a straightforward residential property an auditor may accept other evidence in some years; for commercial property, related-party arrangements or anything unusual, a current independent valuation is the only reliably safe position.

What is no longer safe is leaving a figure unchanged. In 2024 the ATO wrote to more than 16,500 SMSFs that had reported property at the same value for three or more consecutive years, and to the auditors of those funds. An unchanged value is now itself a flag, whether or not it happens to be correct.

Eight events that require a valuation

Some are annual; others are one-off events an auditor will look for specifically.

• Preparing the annual financial statements — market value as at 30 June.
• Acquiring business real property from a related party.
• An in-specie contribution of property into the fund.
• An in-specie transfer of property out of the fund.
• Commencing a pension, or a partial commutation.
• Paying a death benefit or a lump sum.
• Any transaction between the fund and a related party.
• Winding up the fund, or a change in trustee structure.

What makes an auditor qualify the report

These are the reasons we are asked to prepare a valuation after an audit has already begun — the expensive way to do it.

Audit red flags and their remedy

Getting the timing right

The effective date must be 30 June of the relevant financial year, and the valuation should be commissioned close to it rather than long afterwards. A report effective 30 June but prepared in September is entirely normal and acceptable; a report effective in March and used for the June accounts is not.

Practically: instruct in May or June, so inspection and the report both land inside a sensible window. We send the signed PDF to the trustee and, on request, directly to the accountant and the auditor, so the audit file is complete without anyone forwarding attachments.

• Effective date stated as 30 June of the relevant year.
• Valuer independent of the fund, its members and its related parties.
• Comparable sales schedule with full addresses and adjustments.
• For leased commercial property, net income analysis and market capitalisation rates.
• Independence declaration and valuer qualifications included.
• Copies sent to trustee, accountant and auditor.

Questions we are asked about this

Keep reading

Sources

• Verifying the market value of fund assets — Australian Taxation Office — what SMSF auditors must obtain
• Market valuation for tax purposes — Australian Taxation Office — the eight valuation fundamentals
• Australian Property Institute — Professional Practice Standards and the CPV designation

This page is general information about how valuations are used for tax purposes. It is not tax advice. Your accountant or tax agent should confirm which provision applies to your circumstances.