There is a lot of confusion in the market place about the valuation of fund assets. Although not currently required by law, both the ATO and 'best practice' accounting standards suggest that a self-managed super fund should account for fund assets on a market value basis, rather than historical cost or any other method.
Market valuations are also important throughout the life cycle of the SMSF. Especially required when member's commence pensions, roll benefits out of the fund, take lump sum payments, or when the super fund is part of any Family Law proceedings.
The ATO has indicated that where the value of an asset is relatively easy or simple to determine and calculate, the asset can be valued, ie direct shares, listed managed funds. Where the asset is difficult to or complex to value, the trustees should engage a valuer for the asset.
The correct valuation of fund assets will also help the trustees to calculate investment performance and help in the investment decision-making process and required under law.
The Cooper Review in 2010 recommended that the Government legislate to require that assets of a SMSF are valued at their net market value. The Government has agreed to this recommendation and is currently consulting with relevant industry on its implementation.
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