One of these tasks is completing a valuation of your assets as at 30 June for the year you are lodging. Asset valuation is a key component in preparing meaningful SMSF financial reports and each year you need to value the assets of the fund at their market value.
WHAT IS MARKET VALUE?
Market value is the amount a willing buyer of the asset could reasonably be expected to pay to acquire the asset from a willing seller if all the following apply:
- the buyer and seller dealt with each other at arm's length in relation to the sale;
- the sale occurred after proper marketing of the asset; and
- the buyer and seller acted knowledgeably and prudently in relation to the sale.
WHO CAN DO A MARKET VALUATION?
In most cases a trustee can perform the valuation. The Australian Taxation Office (ATO) have published valuation guidelines for you to follow. They explain their approach to valuation, the terms used and general valuation principles.
The important thing in all cases is the person who conducts the valuation must base their valuation on objective and supportable data. In some circumstances you will need to engage a qualified independent valuer, for example if your fund transfers a collectable or a personal use asset to a related party.
It is important to have the valuation done early as you will need it for the purpose of preparing your fund's accounts and financial statements. It is advisable to have these ready by the time you appoint an auditor. It will make their job easier and it's likely to reduce the time they take to complete the audit.
PAYING THE SUPERVISORY LEVY – IT IS AN ANNUAL REQUIREMENT
All self-managed superannuation funds are required to pay the supervisory levy along with the lodgement of their SMSF annual return. The levy is currently $259 per year and is payable one year in advance.
The levy is payable for every year your fund is registered, even if your SMSF has no tax liability in that year. The annual levy is the same for all SMSFs, however, as the levy is paid in advance, SMSFs who are lodging their first SAR, or are winding up and lodging their final SAR, may have a different amount to pay.
If your SMSF is continuing to operate into 2020–2021 and it was registered in 2019–2020, you need to pay for both 2019–2020 and 2020–2021 and if an earlier year, you need to pay for only 2020–2021.
If your SMSF wound up in 2019–2020 and it was registered in 2019–2020, you need to pay for only 2019–2020 and if an earlier year, you do not have anything to pay.
As the levy amount is pre-populated on the SAR, most funds do not have to do anything other than pay the levy. However, if you have a newly registered fund, or your fund is winding up, you will need to make an adjustment on the SAR to determine the amount to pay.