Why It’s Critical to Value SMSF Assets at Market Value Now

Why It’s Critical to Value SMSF Assets at Market Value Now

With the proposed introduction of Division 296 tax legislation likely to take effect, it’s essential to ensure all SMSF assets are accurately valued at market value when preparing financial statements for the year ending 30 June 2025.

Why does this matter?

Accurate valuations could reduce your exposure to Division 296 tax by minimising potential unrealised gains occurred between 1 July 2025 and 30 June 2026. If your SMSF assets are correctly recorded at their market value as at 30 June 2025, the subsequent unrealised growth over the following year may be lower — potentially reducing the tax liability under Division 296.

Case Study:

Andrew’s SMSF was valued at $3.5 million on 30 June 2025 and grew to $4.2 million by 30 June 2026. He chose to retain the SMSF property’s January 2025 valuation for his 30 June 2025 reporting.
Andrew made no contributions or withdrawals, so his earnings for tax purposes totalled $700,000.

Taxable portion over $3 million:
($4.2M – $3M) ÷ $4.2M = 28.57%
Division 296 tax = $700,000 × 28.57% X 15% = $29,999

How to save $12,000:

If Andrew had obtained an updated independent valuation in June-July 2025, reflecting a revised market value of $3.8 million as at 30 June 2025, the earnings would be reduced to $400,000 (from $3.8M to $4.2M).

Taxable portion over $3 million:
($4.2M – $3M) ÷ $4.2M = 28.57%
Division 296 tax = $400,000 × 28.57% X 15% = $17,142

Clearly, Andrew pays significantly less tax.

Keep It Realistic:

It is crucial not to artificially inflate the asset values. The ATO and SMSF auditors will closely scrutinise valuations which should be based on objective and supportable data in accordance with the ATO’s valuation guidelines. Annual market valuation for SMSF assets is a legal requirement under SIS Regulation 8.02B of the SISR.

Start now. Ensuring accurate market valuations for your SMSF for the year ending 30 June 2025 could potentially make a significant difference to your tax obligations under the upcoming Division 296 regime.

This article is general education only nor is it taxation or investment advice. Professional advice should be sought for personal circumstances.