The end of the financial year can be a busy time for SMSF trustees. Having the right information ready can help your SMSF accounts and annual audit run more smoothly.
The ATO continues to focus on the evidence supporting the value and ownership of SMSF assets, particularly property and unlisted investments. This is especially important where investments involve related parties.
To help you prepare, we’ve outlined five common audit queries and areas we recommend checking before we prepare your SMSF accounts.
1. Check whether any previous years’ audit issues remain outstanding or unresolved
If your SMSF had an outstanding audit issue in the previous financial year, make sure it has been addressed before we prepare the current year’s accounts.
If you are unsure whether an issue has been resolved, please ask your SMSF team. We can review the prior-year audit and let you know whether any further action or supporting documents are required.
Addressing these matters early can help avoid delays. If an issue remains unresolved over multiple years, it can also result in more significant audit and compliance consequences.
2. Make sure your 30 June bank statements are available
Please make sure you have the appropriate bank statements for each SMSF bank account.
- If your account has a data feed:
A bank statement as at 30 June is generally required as audit evidence. - If your account does not have a data feed:
Please provide bank statements covering the full financial year.
The statement should clearly show the account name, BSB and account number. Ideally, the account name should identify the trustee as trustee for the SMSF.
What about term deposits?
If your bank does not issue a statement as at 30 June, we may need a statement or confirmation issued after 30 June to confirm that the term deposit was still held by the SMSF at year-end.
Please also let us know if you opened or closed any bank accounts or term deposits during the year. This helps us ensure all accounts are recorded correctly and, where available, arrange an appropriate data feed.
3. Review your SMSF property valuation
If your SMSF owns property, the property needs to be valued at market value each year, with appropriate evidence to support that value.
A valuation used in a previous year may not, on its own, be enough to support the current year’s market value. The evidence should be relevant to the property and the market at the time of the valuation.
This is particularly important where the property is leased to a related party, and where changes in the property’s value may affect other SMSF considerations, including Division 296.
What can help support a property valuation?
The most useful evidence is generally recent, relevant and comparable market information.
Depending on the circumstances, supporting evidence may include:
- Recent comparable property sales
- Local market or suburb data
- Evidence showing the market has remained relatively stable
- An updated valuation supported by relevant market data
- A letter or appraisal from a local real estate agent confirming the property’s current market value
- An explanation of why particular comparable sales remain relevant where there are significant differences in value
A formal valuation by a qualified valuer is not necessarily required in every case. What is important is that the evidence supports the market value and that the basis for the valuation can be explained.
We recommend obtaining updated valuation evidence within three months of 30 June, where possible.
For more information on SMSF valuations, please read our SMSF property valuation checklist article.
What if your SMSF invests in a unit trust?
If your SMSF holds units in a trust that owns property, the value of the underlying property may also affect the value of the units held by the SMSF.
This means you may need appropriate evidence to support the value of the underlying investment.
4. Review your SMSF property lease
If your SMSF property is leased to a related party, the arrangement must be properly documented and operate on commercial terms.
Your lease should clearly outline matters such as:
- The rent payable
- The lease term
- Rent review dates
- How often rent is paid
- Responsibility for property outgoings
- Other obligations of the landlord and tenant
Check your rent
If the lease requires a rent review, make sure the review has been completed, and the new rent is properly documented.
A rental appraisal may be needed to support that the rent remains consistent with the current market rent, particularly where the tenant is a related party.
It is also important to check that the lease terms are being followed. This includes rent payments, rent reviews and responsibility for outgoings.
Has the lease expired?
If the lease term has expired, make sure it has been appropriately renewed.
If the lease includes an option for a further term and that option has been exercised, make sure this is documented and that the rent is reviewed where required.
5. Prepare evidence for unlisted investments
Unlisted investments can require additional documentation to support their ownership, existence and market value.
Thinking about making a new unlisted investment?
If you are considering investing in an unlisted company or unit trust, please speak with your Morrows SMSF team before making the investment.
There are specific superannuation rules and compliance considerations that may apply. Discussing the investment with us before proceeding can help identify any issues early.
Already hold an unlisted investment?
If your SMSF already holds an unlisted investment, we will generally need evidence to support the investment at 30 June.
Unlisted company shares
Depending on the investment, this may include:
- Signed company financial statements for the latest financial year
- The company’s tax return, where available
- A share certificate
- A shareholding statement or share register confirming the SMSF’s ownership
- Dividend statements for dividends received during the year
- Current valuation evidence supporting the value of the shares
- Details of any changes in shareholding or transactions during the financial year
Unlisted unit trust investments
Depending on the investment, this may include:
- Signed trust financial statements for the latest financial year
- The trust’s tax return
- A unit certificate
- A unit holding statement or unit register confirming the SMSF’s ownership
- Current evidence supporting the value of the underlying investment
- Details of any changes in unit holdings or transactions during the financial year
If an unlisted investment involves the SMSF, its members, or another related party, you may need to provide additional documentation. This can include evidence supporting the valuation, ownership and compliance with the relevant superannuation rules.
A little preparation can make a big difference
Your SMSF audit doesn’t need to be complicated, but having the right information ready can make the process much easier.
If you’ve bought or sold an investment, changed a lease, made a new investment, opened or closed a bank account, or made any other significant change to your SMSF during the year, please let your Morrows SMSF team know.
If you’re unsure what documentation you need, please contact your Morrows SMSF adviser; we’re happy to help you work through it.
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