ATO says it will not impose penalties for SMSF asset valuations during COVID-19 due to lack of evidence

When SMSF trustees prepare the financial statements and accounts for their fund, they must report the fund assets at market value to comply with regulation 8.02B of the Superannuation Industry (Supervision) Regulations 1994 (SISR). Before this came into force on 7 August 2012, unless the fund was paying a pension or held in-house assets, trustees could provide a valuation for fund assets every three years. This was considered no longer sufficient, and assets must now be reported at market value every year with evidence to support the valuation.

However in its latest update to the rules around reg 8.02B, the ATO states (scroll down) that it will not impose penalties if it is satisfied that SMSF trustee finds it difficult to obtain the required valuation evidence for fund assets due to the impacts of COVID-19.

“If we are satisfied this was due to the impacts of COVID-19, the contravention will not result in penalties,” the ATO says. “Instead the trustee will receive a letter from us advising them to ensure they comply with our valuation guidelines and have supporting valuation evidence by the time of their next audit if possible, as repeated contraventions can lead to penalties.”

The rules state that it is the trustee’s responsibility to provide documents requested by their auditor which supports the market valuation for their assets. It is not the auditor’s role to determine the market value of the fund’s assets.

The ATO does advise however that auditors should consider the need to modify Part B of their audit report and lodge an auditor/actuary contravention report (ACR), if necessary, during the 2020 and 2021 financial years. The ACR should include the reasons why the trustee was unable to obtain the appropriate evidence.

Harper Group Pty Ltd – Chartered Accountants Frankston - Ph 9770 1547 

Disclaimer: All information provided in this article is of a general nature only and is not personal financial or investment advice. Also, changes in legislation may occur frequently. We recommend that our formal advice be obtained before acting on the basis of this information.

Please note we at Harper Group Pty Ltd are not licensed to provide financial product advice under the Corporations Act 2001 (Cth)and taxation is only one of the matters that must be considered when making a decision on a financial product, including on whether to make superannuation contributions. You should consider taking advice from the holder of an Australian financial services licence before making a decision on a financial product.