ATO updates valuation guidelines for pension reporting
The ATO has updated its valuation guidelines in order to clarify when a reasonable estimate can be used for valuing pension assets when reporting to the ATO.
The ATO has updated its valuation guidelines in order to clarify when a reasonable estimate can be used for valuing pension assets when reporting to the ATO.
In an updated version of its valuation guidelines, the ATO has clarified that SMSF professionals and their clients can use a reasonable estimate for determining the value of assets that support a pension when reporting to the ATO. However, there are other situations where a reasonable estimate cannot be relied on.
The ATO reminded professionals and SMSFs that the market value of the assets that support a pension or super income needs to be determined on either the commencement day of a pension or, for ongoing pensions, 1 July of the financial year in which the pension is paid.
“Similar to valuing assets for the purpose of financial reports, the valuation can be undertaken by anyone as long as it is based on objective and supportable data,” it stated.
“Where the nature of the asset indicates that the valuation is likely to be complex, you may also consider the use of a qualified independent valuer.”
The ATO said it is expected that the SMSF trustees know the value of the assets in their fund.
“This does not mean that an external valuation needs to be performed for all assets each year. However, an external valuation of an asset such as real property may be prudent if you expect the valuation is now materially inaccurate or a significant event has occurred since it was last valued,” it said.
The ATO stated that it is acceptable to use a reasonable estimate of the value of the account when a pension is commenced partway through the year.
“It is also accepted that a reasonable estimate value of the account balance can be used when calculating the value of a pension for transfer balance cap purposes and the pension commenced on 1 July, you need to report the event to us by 28 October and a full valuation of the assets supporting the pension is not possible by this date,” it stated.
The ATO noted that it may be difficult to value assets such as private company shares by the date the TBAR is due.
“Although a reasonable estimate of the value of a pension can be used in the circumstances described above, you cannot rely on this reasonable estimate when preparing the SMSF’s financial accounts and calculating the SMSF’s entitlement to exempt current pension income (ECPI),” it warned.
Miranda Brownlee
28 May 2019
smsfadviser.com
Hot Issues
- ATO encourages trustees to use voluntary disclosure service
- Beware of terminal illness payout time frame
- Capital losses can help reduce NALI
- Investment and economic outlook, August 2024
- What the Reserve Bank’s rates stance means for property borrowers
- How investing regularly can propel your returns
- Super sector in ASIC’s sights
- Most Popular Operating Systems 1999 - 2022
- Our investment and economic outlook, July 2024
- Striking a balance in the new financial year
- The five reasons why the $A is likely to rise further - if recession is avoided
- What super fund members should know when comparing returns
- Insurance inside super has tax advantages
- It’s never too early to start talking about aged care with clients
- Capacity doubts now more common
- Most Gold Medals in Summer Olympic Games (1896-2024)
- SMSF assets reach record levels amid share market rally
- Many Australians have a fear of running out
- How to get into the retirement comfort zone
- NALE bill passed by parliament
- Compliance focus impacts wind-ups
- LRBA interest rates increase for 2025
- Income-free areas set to increase from 1 July
- Most Spoken Languages in the World
- Middle-to-higher incomes boosting SMSF growth
- Investment and economic outlook, May 2024
- Transitioning into retirement: What you should know
- Plan now to take advantage of stage 3 tax cuts
- Deeming freeze a win for Age Pensioners
- Downsizer contributions can be time critical
Article archive
- April - June 2024
- January - March 2024
- October - December 2023
- July - September 2023
- April - June 2023
- January - March 2023
- October - December 2022
- July - September 2022
- April - June 2022
- January - March 2022
- October - December 2021
- July - September 2021
- April - June 2021
- January - March 2021
- October - December 2020
- July - September 2020
- April - June 2020
- January - March 2020
- October - December 2019
- July - September 2019
- April - June 2019
- January - March 2019
- October - December 2018
- July - September 2018
- April - June 2018
- January - March 2018
- October - December 2017
- July - September 2017
- April - June 2017
- January - March 2017
- October - December 2016
- July - September 2016
- April - June 2016
- January - March 2016
- October - December 2015
- July - September 2015
- April - June 2015
- January - March 2015
- October - December 2014
April - June 2019 archive
- Recession on our mind
- What it will take to close the super gap between men and women
- Australia - How are we going as 2018-19 ends?
- LRBAs, guarantees in need of review after property market falls
- Average age for establishing SMSFs sitting at 48.9: Report
- ATO updates valuation guidelines for pension reporting
- ATO figures show jump in starting balances for SMSFs
- Your personal financial register
- Australia’s $4bn Super blackhole impacting self-employed most
- The proper help can be a benefit - age pension
- SMSFs on ATO’s radar in cryptocurrency review
- Limited recourse borrowing arrangements - LRBAs
- What a financial planner does to help.
- Goodbye to ad-hoc portfolios
- Wanted: More voluntary super contributions
- Australia by the numbers – May Update
- Federal Budget 2019 - Overview
- How the 2019 Federal Budget affects you
- The problem with getting to 53 years of age.
- Paying for health care in retirement
- Personal super contributions and the 10% test
- What investors can expect as key moves affecting markets await
- ATO flags PAYG obligations for SMSFs with legacy pensions
- Don't just plan for retirement; Plan for your life
- Consumers misunderstand types of advice
- Budget Time - How's Australia going?