Why the $3M Super Tax Could Lead to Risky SMSF Valuation Practices
With the Federal Government’s proposed tax on superannuation balances over $3 million scheduled to take effect on 1 July 2025, there is growing concern across Australia’s financial and auditing sectors about how SMSFs may respond. At the heart of this issue is the value of assets held within these funds—and who gets to decide what they’re worth.
The Division 296 tax will apply a 15% impost on unrealised gains, meaning that even paper profits on unlisted assets like property or private company shares will attract tax. Naturally, this has created two conflicting motivations among SMSF trustees. Those just under the threshold want low valuations to stay exempt. Those well over it want high valuations now to reduce the amount of future tax exposure.
This trend is causing concern among auditors and financial professionals. Belinda Aisbett of Super Sphere notes that the industry is seeing a surge in requests for valuations that suit specific outcomes—not necessarily market-based reality. The problem? There are currently no legal requirements for independent sworn valuations in SMSFs. Trustees can rely on appraisals or internal assessments—leaving the door wide open for manipulation.
Renown Lending views this issue through a compliance and governance lens. Our experience with high-net-worth clients and SMSF trustees reinforces the importance of credible, evidence-backed valuations—especially when they underpin financial decisions, tax obligations, and investment strategies. Whether it’s real estate appraisals or private business interests, clarity and accuracy must be prioritised over convenience.
There’s also a practical reality: accurate valuations aren’t cheap. A sworn valuation for a commercial property can cost upwards of $2,000, and more obscure holdings can be exponentially more expensive. This presents a dilemma for SMSFs seeking to minimise administrative costs while still meeting evolving ATO expectations.
From a lender’s perspective, this shifting valuation culture could complicate funding applications where SMSFs seek loans using these assets as security. Reliable asset valuations are critical in structuring finance, assessing risk, and maintaining lender confidence. If regulatory scrutiny intensifies—as many experts expect—it’s likely we’ll see more stringent valuation rules mandated across the industry.
In summary, while the $3 million super tax is intended to increase fairness in Australia’s retirement system, it may also unintentionally encourage risky behaviour unless oversight is strengthened. At Renown Lending, we advocate for transparent, accountable valuations—not just to meet regulatory expectations, but to protect our clients’ long-term wealth strategies.
For trusted lending solutions backed by common-sense valuations, reach out to Renown Lending today.
