In March 2024, the ATO went looking for funds reporting the same asset value year after year. It found more than 16,500 that had reported certain assets at an unchanged value for at least three consecutive income years — residential and commercial property, unlisted companies, and unlisted trust investments. Every one of those funds got a letter. So did their auditors.
Then the ATO did something more telling. It waited for the next annual return and checked whether anything had changed. 80% updated their property valuations. Only 48% updated unlisted trust valuations.
That gap is the story. And with 30 June 2026 now behind us, it's the right moment to deal with it — because your fund's balance date is locked in, but the evidence supporting those values isn't. Not yet.
What the rule actually says
Under regulation 8.02B of the SIS Regulations, your fund's financial statements must report all assets at market value at 30 June, every single year. Not just the assets that changed. Not just the ones that were easy to price. All of them, every year.
This is where trustees quietly drift. An asset gets valued once, the figure gets carried forward, and three years later nobody remembers whether it was revisited. From the inside it doesn't look like non-compliance — it looks like paperwork. From the ATO's side, it looks like a flag.
The three-year myth
The most common defence: "We had it valued a few years ago — property only needs doing every three years."
There is no three-year rule. It's a hangover from old practice, not the law.
But the correction cuts both ways, and this is where trustees are often told the wrong thing: you do not have to buy a fresh independent valuation every single year. What you must have, every year, is a market value supported by objective and supportable data. Sometimes that means paying a valuer. Often it doesn't.
A new valuation is genuinely expected when circumstances have moved — a renovation, a rezoning, a change in rental yield, or a market that has shifted underneath you. Carrying a figure forward through all of that is what draws attention.
What actually counts as evidence
For listed securities, it's straightforward: the closing price at 30 June.
For real property, the ATO accepts a range of material, including:
- an independent appraisal from a real estate agent
- recent comparable sales in the area
- a recent contract of sale, where nothing material has changed since
- the council rates notice
- net income yield, for commercial property
One critical point trustees miss: no single document is enough on its own. A rates notice by itself is not a valuation. The ATO expects a few sources pointing in the same direction, dated as close as possible to 30 June.
The blind spot: unlisted trusts and companies
Remember that 48% figure. When the ATO pushed, most trustees fixed the property — it's tangible and comparable sales are easy to find. Unlisted trusts and companies were left largely untouched.
They're also the hardest to evidence, which is precisely why they get skipped. There's no listed price and no comparable sale down the street. Supporting a unit or share value means going back to the underlying entity: its financial statements, its net assets, the basis on which the units were priced. If your fund holds an unlisted investment and the value hasn't moved in years, assume that is the first thing an auditor will ask about.
Why this matters more from 1 July 2026
Division 296 is now law. It passed Parliament on 10 March 2026 and applies from 1 July 2026, adding an additional 15% tax on earnings attributable to balances between $3 million and $10 million, and an additional 25% above $10 million. Both thresholds are indexed.
Importantly, the final law dropped the proposed tax on unrealised gains — so a valuation doesn't create a tax bill on paper profits. But your asset values still determine your member balance, and that balance is what gets measured against those thresholds. For funds sitting anywhere near $3 million, a poorly supported valuation now carries a consequence it didn't before.
Where your auditor fits
Your auditor can't simply accept a number — they must obtain sufficient appropriate evidence that assets are reported at market value. If it isn't there, they are required to modify the independent auditor's report and, where the criteria are met, lodge an Auditor Contravention Report with the ATO.
Some have not been doing this. Across that 16,500 cohort, more than 1,000 associated auditors had not lodged a single ACR over potential valuation breaches. ASIC subsequently took action against 17 auditors over failures tied to valuation requirements, and in its 2024–25 compliance program the ATO reviewed over 200 auditors, referring 41 to ASIC.
The point for trustees isn't that auditors are being punished. It's that an auditor who waves a stale valuation through isn't doing you a favour. The risk lands in both places: the auditor faces ASIC and ATO scrutiny, and your fund is left with a modified report, a possible contravention report, and values the regulator has already shown it will check. It's one more reason the choice of auditor matters — a point we covered in our look at the ASIC auditor crackdown.
What to do now
The financial year has closed, which makes this the ideal window. Evidence gathered now is contemporaneous with 30 June. Evidence scrambled together six months later, when the audit finally lands, is reconstruction — and it looks like it.
- List every asset that isn't listed securities or cash.
- For each, ask: what changed this year, and what proves the value?
- Collect two or three sources per asset, dated near 30 June.
- For unlisted holdings, request the underlying entity's financials now, while the people
who prepare them are still thinking about the year just gone.
Doing this early also keeps your audit — and your lodgement — on schedule, which matters given the backlog of unlodged returns the ATO is chasing.
At SMSF Audit Group, careful, independent SMSF audits are all we do — and valuation evidence is one of the first things we look at. If you'd like a clear view of what your fund needs before the audit starts, get in touch with our team.