Highlights

  • Market valuations are a specific focus of the ATO's SMSF auditor compliance program for 2026–27.
  • Auditors are expected to obtain sufficient, appropriate and objective evidence supporting the Market Value of fund assets.
  • Division 296, which applies from 1 July 2026, increases the significance of accurate member balances and underlying asset valuations.
  • Direct property, unlisted investments and other hard-to-value Assets are likely to require stronger supporting evidence.

Market valuations have become one of the most scrutinised areas of self-managed super fund (SMSF) compliance, and the Australian Taxation Office has made clear that 2026–27 will be no exception.

Between its auditor compliance program and the commencement of Division 296, the ATO has placed greater emphasis on whether the values trustees report are properly supported.

For funds holding hard-to-value assets, the message is clear: the valuation needs to be reasonable, and the evidence supporting it needs to withstand audit scrutiny.

The valuation obligation

Under regulation 8.02B of the Superannuation Industry (Supervision) Regulations 1994, SMSF trustees must Value Fund assets at market value when preparing the fund's accounts and statements.

This is an annual requirement rather than a one-off exercise.

It applies across the SMSF's portfolio, including listed securities, direct property, unlisted investments and collectables.

The complexity of the evidence required will vary by asset. A Listed security with an observable Market Price is generally much easier to substantiate than private property or an unlisted investment.

Why the ATO is focused on it

Market valuation reviews are one of the ATO's specific SMSF auditor compliance priorities for 2026–27.

The regulator intends to examine whether auditors obtained sufficient appropriate objective evidence to verify compliance with market valuation requirements.

This focus is particularly relevant where asset values may affect a member's Division 296 position. The ATO has stated that the 2026–27 valuation focus becomes especially important where reported values may trigger a Division 296 liability.

Division 296 applies from 1 July 2026. For 2026–27, the large super balance threshold is $3 million, with an additional tier applying above the $10 million very large super balance threshold. Accurate total super balance information is therefore important to the operation of the regime.

What counts as good evidence

The ATO has identified insufficient evidence supporting the ownership, existence and market value of SMSF assets as a recurring auditor deficiency.

Objective and contemporaneous evidence is generally more persuasive than an unsupported Trustee estimate.

Depending on the asset, supporting material could include independent property valuations, recent comparable transactions, reliable financial information for unlisted entities, holding statements or other evidence that demonstrates how the reported market value was determined.

The central requirement is not that every asset must receive a formal independent valuation each year. Rather, trustees need appropriate evidence supporting the market value reported, with the nature and strength of that evidence reflecting the asset involved.

Where an auditor cannot obtain sufficient appropriate evidence, they may need to consider modifying the independent auditor's report and, where the relevant reporting criteria are satisfied, lodging an auditor contravention report.

Who may be affected

All SMSF trustees and auditors are affected by the market valuation requirements, but scrutiny is likely to be greater for funds holding assets without readily observable market prices.

This includes direct property, unlisted companies and trusts, private investments, loans and collectables.

Members with total super balances near or above the Division 296 thresholds also have an additional reason to ensure reported values are properly supported.

An inaccurate valuation can affect more than the financial statements; it can also flow through to member balance information relevant to the new tax regime.

What to consider next

Trustees should obtain and retain suitable valuation evidence for fund assets each year rather than waiting until the auditor asks for it.

Particular attention should be given to property, unlisted investments and other assets where market value cannot simply be confirmed from a quoted market price.

Auditors, meanwhile, should ensure their workpapers clearly document the evidence obtained, the valuation methodology considered and the basis for accepting the reported amount.

Leaving difficult valuations until late in the audit process increases the risk of delays, additional queries or reporting issues.

Hard-to-value assets draw the most scrutiny

Assets without readily observable market prices naturally create more valuation risk.

Direct real property is an obvious example. Depending on the circumstances, evidence might include an independent appraisal, recent comparable sales and other objective market information relevant to the property at the reporting date.

Unlisted companies and unit trusts may require current financial statements, information about underlying assets, recent arm's-length transactions or other support for the value adopted.

Collectables and private investments can present similar challenges.

A trustee's estimate is not automatically invalid, but an estimate without objective supporting evidence is unlikely to provide an auditor with sufficient comfort where the asset is material.

Listed investments are generally more straightforward because observable market prices are available. Even then, reported balances should reconcile with appropriate holding records and the fund's accounts.

The Division 296 overlay

Division 296 adds another layer of importance to accurate valuation and member allocation information.

The ATO has confirmed that Division 296 does not change an SMSF auditor's existing obligations. Auditors still need sufficient appropriate evidence supporting the market value of fund assets, while trustees must allocate Investment returns to members on a fair and reasonable basis.

What has changed is the potential consequence of the information being reported.

For 2026–27, Division 296 imposes an additional 15% tax on the relevant proportion of Earnings associated with total super balances above the $3 million threshold. A further 10% applies to the relevant earnings component above the $10 million threshold.

Accordingly, poorly supported asset values can affect the member balance information underpinning the Division 296 calculation.

That makes a well-documented valuation file increasingly important.

What trustees and auditors should prioritise

For trustees, the priority should be to establish a clear valuation process for every material asset and retain the evidence supporting the year-end figure.

For auditors, the focus should remain on whether that evidence is sufficient, appropriate and objective rather than simply accepting a figure because it appears in the accounts.

Particular attention should be given to assets with subjective valuations and funds whose member balances are close to the Division 296 thresholds.

The underlying valuation rules are not new, but the ATO's 2026–27 compliance focus and the commencement of Division 296 have increased the consequences of getting them wrong.