Valuing Related Unit Trusts in an SMSF

Short answer

Why are units in a related unit trust hard to value for an SMSF?

They have no market price, so the value depends on the trust's underlying assets, its liabilities and what the deed gives each unit. As reported, the ATO has called failing to obtain objective data on those assets an outdated practice, and its own evaluation found only around 45% of funds changed their unlisted trust valuations after its letters.

Key takeaways

A unit in a private unit trust has no quoted price. Its value is built from the trust's assets, less its liabilities, as the deed allocates them to units.
The ATO's guide points to an independent expert valuation of the trust's assets, a property valuation where property is the only asset, or a recent sale between unrelated parties.
On the ATO's own initial evaluation, around 63% of the funds it contacted changed property valuations after its letters, but only around 45% changed unlisted trust investment valuations.
Whether a minority or marketability adjustment applies depends on the deed and the facts, so the report should set out the reasoning.

Why are units in a related unit trust hard to value?

Because there is no market to read a price from, and four separate things sit between the unit and its value:

The assets. Property, shares, loans, cash and sometimes interests in other entities, each needing its own evidence.
The liabilities. Borrowings, loans from unit holders and related parties, tax and distributions owing.
The deed. It sets what a unit is entitled to and how income and capital are shared.
The related-party dealings. Loans, leases and fees between the trust and the people behind it may not be on arm's length terms.

The trust's accounts rarely answer all four. The ATO's guide says signed, audited statements that carry assets at cost are unlikely to be sufficient on their own, and its auditor guidance says statements are reliable evidence of market value only if they are signed, audited and value assets at market value rather than cost.

Prefer to talk? 0433 475 518

What does the ATO say about valuing unit trust units?

The ATO's guide to valuing SMSF assets asks trustees to consider the value of the assets in the trust and the price paid for the units. Its list of evidence is an independent expert valuation of the trust's assets, a property valuation where property is the trust's only asset, and the date and price of the most recent sale of a unit between unrelated parties.

Without an independent expert valuation, the trustee should provide evidence of how the value was substantiated, including the objective and supportable data relied on, the method and the assumptions. The ATO suggests considering a qualified independent valuer where the valuation is complex or the units are a significant proportion of the fund.

What did the ATO find about unlisted trust valuations?

As reported by SMSF Adviser in March 2025, the ATO identified more than 16,000 SMSFs that reported assets such as property and unlisted trusts at the same value for three consecutive years. It contacted them in March and April 2024. The ATO's own initial evaluation, in its key messages of 8 July 2025, found around 63% of funds changed property valuations but only around 45% changed unlisted trust investment valuations after its market valuation letter campaign. (SMSF Adviser reported 80% and 48% in March 2025.)

The ATO named two outdated practices: valuing only every three years, and not obtaining objective data on the underlying assets of an unlisted unit trust. In our reading, the second applies directly to a related unit trust: a unit price taken from the trust's own records is not objective data on its underlying assets. We cite these figures as reported. See ATO letters about unchanged values.

What does the trust deed change?

It defines what is being valued. The deed sets out the classes of units, what rights each carries, how income and capital are distributed, what the trustee may do (for example borrow, issue new units or redeem units), and any limits on transferring units.

A valuer reads the deed to work out what a holder of these units can actually receive and control, which is not always the same as a proportion of the trust's net assets. What the deed means in law is a question for your lawyer. How it affects value is for the valuer, and the report says which deed terms were relied on.

How does a valuer approach a related unit trust?

In seven steps, working from the trust's assets up to the fund's units:

Read the deed and the unit register to see what each unit holder is entitled to.
List the trust's assets at the valuation date and find evidence for each: a closing price for listed securities, a property valuation for real property, and recoverability for loans.
List the liabilities, including borrowings, loans from related parties, tax and distributions owing.
Work out the trust's net assets at market value.
Attribute that value to the units under the deed, allowing for any classes.
Consider whether the fund's interest warrants an adjustment for control or marketability, based on the deed and the facts.
State the method, data, assumptions and limitations so the auditor can follow the reasoning.

Where the trust owns property. Property held directly by your fund: we are not taking direct property valuations yet. If a trust or company owns the property, we value the units or shares using a property valuation you already hold. We never sign a property figure ourselves.

Unpaid distributions deserve a look. The ATO says that if a fund is entitled to a distribution from a related trust and it stays unpaid, the fund may contravene the in-house asset rules, the arm's length rule and the sole purpose test.

Do discounts apply to units in a related unit trust?

It depends on the deed and the facts, and the report sets out the reasoning. We do not publish a standard percentage or a house position, because the right answer for one trust can be wrong for the next.

The questions that decide it include who controls the trust, whether the fund can redeem its units or force a distribution or wind-up, whether the deed restricts transfers, whether the fund is the only unit holder, and how distributions have been paid in practice. A valuer independent of the fund should answer them on the evidence, then show the working.

What do we need to value related unit trust units?

The trust deed and all amendments, and the unit register
Financial statements for the last three years, with notes
A list of assets at the valuation date, and any property valuations you already hold
Loan, lease and related-party agreements, and distribution statements
Details of any recent issue or sale of units

Documents come only through the private upload link on your matter, never by email. Investment entity (a trust holding property, cash or listed investments): $995 + GST. A trust running a business is priced by turnover on the pricing page. We confirm the fee in writing before we start. No hourly billing.

Questions

Can the trust's own accounts be used to value the units?

Only if they are reliable evidence. The ATO says signed, audited statements with assets at cost are unlikely to be enough alone. Its auditor guidance treats statements as reliable evidence of market value only if they are signed, audited and value the assets at market value.

Does a related unit trust count as an in-house asset?

It can. The ATO lists an investment in a related party of the fund as an in-house asset, with exceptions for some related non-geared trusts and companies. Whether the exception applies depends on the conditions in the regulations, which is a legal question for the fund's adviser.

Is a property valuation enough where the trust holds property?

The ATO lists a property valuation as evidence where property is the trust's only asset. If the trust also holds cash, loans or other assets, or has liabilities, those need evidence as well.

Do you value the property inside the trust?

No. We value the units. Where the trust owns property, we use a property valuation by a registered or certified property valuer that you already hold. We never sign a property figure ourselves.

How often should a related unit trust be revalued?

Market value must be reported at 30 June each year. A previous independent valuation can be relied on if it is still appropriate and documented, but not if it is materially inaccurate or the value has changed significantly.

Short answers on this topic

Sources

General information only, not advice about your circumstances. A valuation depends on the facts of the business and the purpose it is for.