You valued your fund's assets at 30 June. You put the numbers in the accounts. Job done?
Not quite. The ATO says market-valuation breaches now account for over 12% of every contravention SMSF auditors report to it, roughly one in eight, and that it saw these breaches increase during 2024-25. What trips trustees up is rarely the value itself. It is the evidence behind it. A figure in your financial statements is a conclusion. Your auditor's job is to check the working, and when it is not there, a routine audit turns into a problem.
The rule, in one line
Regulation 8.02B of the Superannuation Industry (Supervision) Regulations 1994 requires every SMSF to report its assets at market value in the fund's accounts and financial statements, for every income year. That covers everything the fund holds, not just what is easy to price. We wrote about the annual obligation in an earlier post. This one is about the evidence behind the number.
Why a number on the page is not enough
Before your annual return is lodged, your SMSF auditor has to do two things: check the assets have been valued correctly, and document whether the basis for each valuation is appropriate. That second part is where funds come unstuck. The auditor does not value your assets. They decide whether your evidence supports the value you reported.
The ATO's standard is that the evidence you give your auditor must be objective and supportable. In plain terms: could someone who has never seen your fund arrive at your number from the papers in the file? If not, the evidence is thin, however reasonable the figure looks to you.
A few examples of what does not clear the bar:
- An agent appraisal or online report that does not list the comparable sales behind it. The ATO says that is generally not sufficient on its own.
- One item of evidence and nothing else. Unless the property was bought recently, one source is generally not enough.
- The same value carried forward year after year, with nothing to show the market has not moved.
When your auditor cannot get sufficient, appropriate evidence to confirm a value, a Regulation 8.02B contravention may have occurred. The auditor must then consider modifying the independent auditor's report, and must lodge an Auditor Contravention Report where the reporting criteria are met.
The "three-year valuation" is not a rule, and not a period
Many trustees believe property only needs a formal valuation every three years. That belief is common, and it is not what the guidance says.
No law sets a three-year cycle, and the ATO's valuation guidance sets no period at all. What it says is narrower: if you get a valuation from a qualified independent valuer, you do not need a new one every year. But you must consider each year whether that valuation still supports the value, and document how you reached that conclusion. Where you do rely on it, the ATO expects other objective and supportable data for the current year as well. Once it has become materially inaccurate, you cannot rely on it.
The ATO says it is placing compliance scrutiny on funds that report the same asset values year after year.
Events that call for a fresh value
Some events mean the asset needs a current value, whatever you were relying on before:
- A member starts a retirement phase pension. The value on the start day feeds the transfer balance cap and the annual pension payment amount.
- The fund acquires an asset from a related party, or disposes of certain collectables to one.
- The fund holds in-house assets, which are measured against the 5% limit at the end of the income year.
- A significant event moves the value. The ATO's examples include natural disasters, macroeconomic events, market volatility, and a change in the asset's character.
Members' total super balances at 30 June rest on these values too. Division 296 started on 1 July 2026, and for 2026-27 audits the ATO has told auditors to check valuations of assets that may trigger a Division 296 liability.
What good evidence looks like
You do not need a formal valuation for every asset every year. You do need a defensible file:
- Property: an independent valuation, or a trustee valuation backed by several sources. Recent comparable sales, the rates notice where it is consistent with the rest, and a written note of how you reached the figure. Evidence should support a value as close as possible to 30 June.
- Listed investments: the closing price on the approved exchange on 30 June.
- Unlisted shares or units: the entity's financial statements, the valuation method you used, and the assumptions behind it. The ATO treats those statements as reliable evidence only where they are signed and audited, and where they value the entity's assets at market value rather than cost.
The theme across all of them: keep the working, not just the answer.
Give your auditor the evidence, not a query
The difference between a clean sign-off and a report the auditor has had to modify is usually a folder of evidence assembled before the audit rather than after a query. The funds that clear the first time are the ones that treated the 30 June value as an evidence exercise, and handed the file over up front.
Not sure your valuation file would stand up? That is worth raising before lodgement. SMSF Audit Group are independent, ASIC-registered SMSF auditors. Send us the fund and we will tell you where your valuation evidence is likely to be questioned.
See how our SMSF audit process works, or get in touch about your fund's audit.
audit@smsfauditgroup.com · 07 5510 8358
General information only, based on ATO guidance and the SIS Regulations current at September 2026. It is not personal financial or tax advice. Check your fund's specifics with a qualified adviser.