Unit trust valuation for SMSFs

What is the difference between a related and an unrelated unit trust?

A related unit trust is one the law treats as connected to the fund through its members or their associates. An unrelated unit trust is an investment the fund holds at arm's length. The legal test is for the trustees and their advisers. What we need is the trust deed, the unit register and the accounts, and the units are valued the same way either way: from the trust's net assets.

The difference matters because dealings with related parties get closer scrutiny. The ATO's guide says acquisitions from related parties are prohibited unless an exception applies, that permitted assets must be acquired at market value, and that investments must be made and maintained on an arm's length basis. For the 5% in-house asset test, all of the fund's assets are valued at year end. See related-party transfers and the in-house asset test.

One exception is worth knowing about. The ATO's SMSF Regulator's Bulletin SMSFRB 2020/1 explains that an investment in a related unit trust that would otherwise be an in-house asset is excluded from that status if the trust is maintained subject to conditions in regulation 13.22C of the SIS Regulations. These are sometimes called ungeared related unit trusts. The conditions must be met when the units are acquired and at all times they are held. They include that the trust has no outstanding borrowings when the units are acquired and does not borrow while they are held, does not conduct a business, and has no interest in another entity among its assets.

If a condition is breached, the ATO says all of the fund's investments in the trust, including future ones, become in-house assets, and they cannot return to their excluded status even if the trustee fixes the problem. We value the units. Whether a trust meets the regulation 13.22C conditions is a legal question for the trustees and their advisers, and we do not advise on it.

Where does the value of a unit come from?

From the trust's assets less its liabilities, shared across the units on issue as the trust deed provides. The ATO's guide tells trustees to consider the value of the entity's assets and the price paid for the units.

• Each asset at market value: listed securities at the closing price on the valuation date, property from a valuation by a registered or certified property valuer, cash and term deposits at their balance, and loans owed to the trust at what can reasonably be recovered.
• Less liabilities: borrowings, loans from unit holders, accrued costs and any tax payable.
• Shared across the units as the deed provides.

The trust deed can change what a unit is worth. We read what it says about classes of units, income and capital entitlements, redemption, transfer restrictions and the trustee's powers, and explain how each affects the value.

There is no standard discount or premium for units in a related unit trust. Whether any adjustment is appropriate depends on the deed and the facts, and the reasoning is set out in the report.

If the trust owns property, the property figure comes from a valuation by a registered or certified property valuer that you hold, and we never sign it. See trusts that own property.

What has the ATO said about valuing unlisted unit trusts?

The ATO has said that valuing without objective data on the underlying assets is an outdated practice. SMSF Adviser reported in March 2025 that the ATO had contacted SMSFs and auditors in March and April 2024 about assets such as property and unlisted trusts reported at the same value for three consecutive years. The ATO's own initial evaluation, in its key messages of 8 July 2025, found around 63% of funds changed property valuations and 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. As reported, it said this can mean penalties for trustees and compliance action for auditors. The ATO's guide says evidence for units can include an independent valuation of the trust's assets, a property valuation where property is its only asset, or the most recent arm's length sale of a unit. Signed audited statements with assets at cost are unlikely to be sufficient on their own. See the ATO letter.

What does a unit trust valuation cost?

It depends on what the trust does. A unit trust that holds property, cash, term deposits or listed investments, valued from its net assets, is an investment entity. Investment entity: $995 + GST. Delivery is 2 business days. Delivery time starts once payment and all required information have been received.

A trust that runs a business is valued on its earnings and risk, and the fee follows turnover. See business interests.

• Turnover under $2 million: $1,495 + GST.
• Turnover $2 million to $10 million: $2,495 + GST.
• Turnover over $10 million or a complex structure: $3,495 + GST.

Annual 30 June update of a valuation we prepared last year, same trust, no restructure or major change: $495 + GST per entity. We confirm the fee in writing before we start. No hourly billing.