Short answer
Market value for an SMSF is the amount a willing buyer could reasonably be expected to pay a willing seller, assuming they deal at arm's length, after proper marketing of the asset, and both act knowledgeably and prudentially. That is the definition in super law, which the ATO uses in its guide to valuing SMSF assets.
How does super law define market value?
Section 10 of the SIS Act defines market value as the amount a willing buyer could reasonably be expected to pay a willing seller for the asset, on three assumptions. The ATO's guide to valuing SMSF assets uses that definition. The three assumptions are:
- The buyer and the seller deal with each other at arm's length.
- The sale happens after proper marketing of the asset.
- The buyer and the seller act knowledgeably and prudentially.
Market value is measured at a date. For the fund's accounts and statements the date is 30 June.
Where does an SMSF need market value?
Trustees must value all fund assets at market value for the fund's accounts and statements each year, under regulation 8.02B of the SIS Regulations. The ATO's guide also calls for a market value in these situations:
- Acquisitions between the fund and related parties.
- Investments that must be made on an arm's length basis.
- Disposals of collectables and personal use assets to related parties.
- The 5% in-house asset test.
- Starting a retirement phase income stream, for the transfer balance cap.
- Each member's total super balance at 30 June.
- Minimum pension payments on 1 July.
How is market value worked out?
For listed securities, market value is the closing price on 30 June. For an asset with no quoted price, the ATO says the value must come from a fair and reasonable process: objective and supportable data, all relevant factors, good faith, rational and logical reasoning, and a result that can be explained to a third party.
For private company shares and unit trust units, the ATO says to consider the value of the entity's assets and the consideration paid. It generally accepts a valuation that does not conflict with its guide, matches the value used for any related capital gains tax event, and is based on objective and supportable data. Otherwise it applies the most appropriate method.
Market value is a defined legal test, not a figure trustees are free to choose. Cost, book value and last year's figure are not the test on their own. We value assets to that test and set out the basis in the report, and trustees and their advisers decide what to do with the result.
Read the full guide
- Unit trust valuation for SMSFsUnits in a private unit trust need a market value at 30 June like any other fund asset. This guide explains where the value of a unit comes from...
- Private company shares in an SMSFShares in an unlisted company need a market value at 30 June like any other fund asset. Here is how they are valued, what the auditor looks for, and...
- 30 June SMSF valuationEvery 30 June the trustee reports each fund asset at market value, and the auditor checks the evidence. This page explains what that means for...
- Arm's length SMSF valuationsAn SMSF must make and keep its investments on an arm's length basis. When the fund deals with a related party, a supportable market value is the...
- How we value SMSF holdingsThe methods we use, what we analyse and what the report contains.
- Fixed fees, confirmed before we startFixed fees set by what the fund holds. No hourly billing.
Related questions
Is the cost of an asset the same as its market value?
No. Market value is what a willing buyer could reasonably be expected to pay a willing seller at the valuation date, on the three assumptions above. The ATO says signed audited statements that show an unlisted entity's assets at cost are unlikely to be sufficient on their own.
More short answers
- How do you value units in an SMSF unit trust?Value the trust's assets and liabilities at market value, then work out what the fund's units are worth under the trust deed. The ATO says to...
- How are unlisted shares in an SMSF valued?Unlisted shares are valued by considering the company's assets and the consideration paid, because there is no quoted price, the ATO says. Evidence...
- Are audited accounts enough to value an SMSF unit trust?Usually not. The ATO says signed audited statements showing a unit trust's assets at cost are unlikely to be sufficient on their own. Trustees should...
- How often do SMSF assets need to be valued?Every year. SMSF trustees must value fund assets at market value for the accounts and statements, as at 30 June. The ATO has named valuing only every...
Last updated . General information only, not advice about your circumstances. A valuation depends on the facts of the business and the purpose it is for.