SMSF valuation requirements explained

Valuation is one of the most common reasons an SMSF audit is qualified or a contravention is reported. The rule itself is simple, but the standard of evidence trips up many funds. This article explains the requirement and what counts as sufficient evidence for each asset class.

The rule

Every asset of the fund must be reported at market value at each reporting date, which for most funds is 30 June. Market value means the amount that a willing buyer and a willing seller would agree on in an arm’s-length transaction. The valuation must rest on objective and supportable evidence, not on the trustees’ estimate or an unsupported figure.

A point worth stressing, because it is widely misunderstood: the old idea that property or other assets only need to be valued every few years is no longer the position. Assets must be reported at market value every year. Even where a full independent valuation is not obtained annually, there must be supportable evidence that the value has not materially changed since it was last established.

What evidence is sufficient

The evidence that satisfies the requirement varies by asset class.

For cash and term deposits, a bank confirmation or statement in the fund’s name is enough.

For listed securities and managed funds, the year end quoted price from a reliable source, agreed to a holding statement, is sufficient.

For real property, the auditor expects more than one source of objective evidence. That can include comparable recent sales in the area, a council rates notice, an independent appraisal, or a registered valuation. A single kerbside appraisal on its own is not sufficient. Where a commercial property is leased to a related party, a formal valuation is generally expected.

For unlisted investments, such as shares in a private company or units in an unlisted trust, the value must be supported by the entity’s financial statements showing its underlying assets at market value, an independent valuation, or a recent arm’s-length transaction price. A bare statement of the holding is not enough.

For cryptocurrency, a holding statement alone is not sufficient. The auditor expects objective evidence of the year end value, such as the closing price published by an exchange that provides historical data.

For collectables, such as artwork or jewellery, an independent valuation is expected for material items, supported by evidence of the asset’s condition.

When an unchanged value is acceptable

A value can be carried forward from the prior year where there is evidence that the market has not materially moved. For a listed security, that evidence is simply the current year end price. For property, it might be recent comparable sales showing prices have been stable. What is not acceptable is an unchanged value with no evidence behind it, particularly where the same figure has been carried for several years. This pattern draws regulatory attention and is a frequent cause of qualification, often alongside a reportable contravention.

Why it matters beyond the audit

Accurate valuations matter for more than the audit opinion. They feed each member’s total superannuation balance, which affects contribution eligibility and other thresholds, and from the 2026-27 year they feed the new additional tax on large balances. An unsupported or inflated value can have real tax consequences for a member, which makes getting the evidence right more important than ever.

The bottom line

Value every asset at market value every year, on objective and supportable evidence, with the evidence matched to the asset class and more than one source for property. Never carry a value forward without support. Strong valuation evidence is the cheapest way to avoid a qualified opinion and a contravention report, and it protects the member’s tax position as well.

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This article is general information for professional readers and is not advice on any specific fund. The superannuation legislation and the applicable auditing and ethical standards govern in each case.