Division 296 intends to impose additional scrutiny on superannuation funds, irrespective of their size. For Trustees, it means a higher demand for robust documentation to confirm their funds’ balances do not surpass the specified threshold. This shift highlights the importance of accurate and credible asset valuation, where relying on self-assessment without comprehensive documentation will no longer suffice.
Current regulations allow Trustees to conduct their own valuations; however, the reliance on such assessments calls for substantial evidence. Trustees are advised to back their valuations with independent, market-based evidence, ideally collected close to the financial year’s end. This approach will likely become indispensable under the new compliance landscape introduced by Division 296.
Particular concern is directed towards assets like property, loans, and unlisted investments where reliable valuation documentation is paramount. For instance, property valuations should be corroborated by real-estate appraisals and comparable sales data, even though acquiring such data can present challenges, especially for unique properties or during market fluctuations.
Similarly, loans must be substantiated with valid agreements, repayment records, and borrower financial disclosures. Unlisted investments require detailed financial statements and evidence of legitimate dealings to ensure asset values are accurate and defensible. Despite potential difficulties in collecting complete documentation, particularly in regional areas, it remains crucial for Trustees to demonstrate due diligence in valuation procedures.
Failure to provide adequate documentation could necessitate auditors filing contravention reports, alerting the Australian Tax Office to discrepancies not due to misconduct but due to insufficient evidence. This scenario forecasts an increase in compliance challenges, which could potentially impact wait times and costs associated with professional service engagements.
While some believe the impacts of Division 296 will be limited to high-balance accounts, underestimating the broader compliance shifts could be detrimental. Regardless of whether individual super balances fall below the threshold, all SMSFs need to be mindful of the evolving regulatory landscape that Division 296 heralds and should prepare accordingly.
