The ATO has recently updated their guidelines regarding year end market valuations for assets.

The updated guidance aims to provide Trustees more responsibility in the process of obtaining evidence to support a declaration of an asset’s market value.

In a recent change which can be viewed here, the ATO has updated its choice of wording, replacing “external valuation” with the wording “qualified independent valuation”.

In addition, the Tax Office notes that where Trustees obtain a valuation by a qualified independent valuer they are not required to have a valuation undertaken each year thereafter unless there are significant changes to the value of the assets held by the Fund. Certain events which might cause a significant change in the value of the assets include but are not limited to; natural disasters, macroeconomic changes, market volatility or changes to the nature of the asset.

It is the responsibility of the Trustees to properly assess whether or not there has been significant changes to the value of their assets and ensure that end of year asset balances are recorded at market rates. This assessment must be made in writing and we provide a template that Trustees can use on this page.

In particular, Trustees will need to ensure that a previous years qualified independent revaluation is still applicable by applying the following tests
1. Assess whether the valuation is still appropriate to use
2. Document how they came to this conclusion

In summary, the changes laid out by the ATO place more of the onus of market valuations for assets onto Trustees, requiring them to properly assess and document why a qualified independent valuation taken out in the previous financial year was used as an appropriate assessment of market value.