What does the ATO say?

The ATO wants property valued each year at market value. They have updated their valuation guidelines and advised that the so-called "three year rule" is an outdated practice.

The ATO is expecting trustees to have objective, supporting data to support the yearly valuation of the property.

They also state it is generally not sufficient to only obtain one item of evidence to support valuations.  They are looking for multiple sources of substantiation and some examples the ATO give are:

• the value of similar properties and recent comparable sales results
• the amount that was paid for the property in an arm's length market, if the purchase was recent and no events have materially affected its value since the purchase
• an appraisal from an independent real estate agent
• whether the property has undergone improvements since it was last valued.

Auditor's comment

This does not necessarily mean a formal valuation needs to be completed each year. However, trustees need to consider this annually and make a declaration as to the evidence they have to either maintain or change the valuation.

The ATO has given some generalised guidelines to trustees here.

We appreciate this type of land can be hard to value as values can fluctuate wildly from season to season, based on a wide range of circumstances.