New evidence requirements for property valuations from 1 July 2021

By Cutcher & Neale Accounting and Financial Services - March 12, 2021

Regulation 8.02B of the Superannuation Industry (Supervision) Regulations 1994 (SISR) requires trustees of self-managed super funds (SMSF) to report the fund’s assets at their market value in the SMSF’s financial statements and accounts every year.

When it comes to valuing property held in a SMSF, the trustees may consider using a qualified independent valuer, especially where the property makes up a significant proportion of the fund’s total assets. If they choose to do this, an external valuation is generally required every three years (industry rule of thumb and not legislation) and not each year. However, if the trustees have a reason to believe that the property’s valuation has become materially inaccurate or has been affected by external events, such as natural disasters or COVID-19, then they should no longer rely on the previous valuation and should obtain a new valuation or look to other sources of evidence to support the valuation.

It is also a requirement of regulation 8.02B that the trustees must provide objective and supportable evidence to their auditor every year to support the value of the fund’s assets. In a recent update, the ATO indicated that real estate agent appraisals stating what the property is “likely to sell for based on sales in the area”, without listing the details of those sales, would not on its own be considered as sufficient and appropriate evidence.

The ATO provided a list of documentation that they would consider to be acceptable evidence to support the market value of real property other than an external valuation. This includes the following:

  • independent appraisals from a real estate agent (kerbside appraisals)
  • contract of sale if the purchase is recent and no events have occurred to the property
  • that could materially impact its value since the purchase;
  • recent comparable sales results;
  • rates notices (if consistent with other evidence on valuation);
  • net income yield of commercial properties (not sufficient evidence on their own and only appropriate where tenants are unrelated).


It is important to note that, according to the ATO, a single item of evidence from the above list will not be sufficient on its own unless the property has been recently sold. The evidence obtained should also support the property market value as close as possible to 30 June, especially where the market is considered to be volatile.

SMSF trustees should note that it is their responsibility as trustees to provide the relevant documentation requested by their auditor to support the market valuation of the fund’s assets. Where the auditor is not provided with sufficient and appropriate evidence of the market value, they will modify their audit report and consider whether an Auditor Contravention Report (ACR) should be lodged with the ATO.

If you would like to discuss this further with one of our superannuation specialists, please contact the Superannuation team.

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