Super tax open to manipulation through property valuations: ASF Audits

The Australian

a day ago

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Australia's biggest auditor of self-managed super funds, ASF Audits, has raised concerns about the manipulation of property and farm valuations in preparation for avoiding Labor's unrealised capital gains tax that would dent Treasury's estimates of revenue.
Labor wants to introduce an unrealised gains tax on superannuation accounts of $3m or more without indexation while the Greens want the threshold to be $2m with indexation.
The Australian Taxation Office is monitoring changes in behaviour of those who have such accounts, partly to check whether such changes might dampen the $2.3bn in revenue Jim Chalmers expects to collect in the first full year of implementation and $40bn over the next decade.
As many as 1.8 million Australians could be caught by unrealised gains tax by the time they reach retirement.
ASF Audits head of technical Shelley Banton, who oversees 50,000 self-managed super funds, said superannuants would be looking to avoid tax by securing valuations on properties, including farms, that helped them reduce the impact from the tax.
'As of June 2025, those who are above the $3m mark will want a valuation as high as possible, and then for the 2026 year, they will want a valuation as low as possible so that they're actually making an unrealised loss instead of an unrealised gain, and therefore they don't have to pay tax,' Ms Banton said.
For those with accounts just below $3m as of June this year, 'they will want valuations which will obviously keep below $3m – that's where the valuations are going to be manipulated effectively, and we need to make sure that the methodology used in those valuations stacks up, so that we as auditors can actually sign off on our audit report'.
Even tax returns for the 2024 financial year, where SMSFs can file late, may be incorporating such valuation manipulation.
'Maybe you don't want to start getting a higher valuation in 2025, maybe you want to start doing that in 2024, so then the valuation you get in 2025 doesn't look as suspect,' Ms Banton said. She added that, while there was always pressure on valuations around tax time, the unrealised capital gains tax 'amps up that pressure considerably … it's a big one'.
Commercial property and farms will be in the firing line, especially where there have been no clear, comparable sales.
Depending on what's possible with valuations, it might also lead some people to withdraw super, and 'if we've looked at what's happened to evidence in other countries when they've imposed this sort of tax regime, we've seen a lot of money not only exit the industry, but also exit the country', Ms Banton said.
Auditor concerns have been raised about possible manipulation of property and farm valuations. Picture: Zoe Phillips
One particular area of concern she raised was who would do the valuations. While licensed valuers have their code of conduct, some real estate agents may not.
'The valuations that probably won't be as difficult to manipulate are what's called 'kerbside valuations' that come from real estate agents,' she said.
Australia's biggest valuations company, Herron Todd White, conducts about 550,000 property valuations every year. The company's managing director of commercial, agriculture and government valuations, Gavin Hulcombe, said valuations are going to be watched very closely.
'One of the big question marks will be whether they will be full valuations or desktop valuations,' he said. 'We think it should be full valuations because of the scrutiny they are going to get.'
He said there had been substantial gains across property, particularly farms, which Labor had considered exempting.
The latest annual valuation increases recorded by the Australian Property Institute show agriculture recorded the highest average annual return over two decades at 12.8 per cent, while industrial land returned 8.2 per cent, residential 7.7 per cent, and commercial 7.2 per cent.
Mr Hulcombe is expecting a ramp-up in valuations after the new tax is introduced into the parliament.
'We have seen a big increase in inquiries, but not instructions yet, as most clients affected by this are waiting to see what the actual legislation looks like,' Mr Hulcombe said.
Valuations can range from as low as $900 to more than $7000, depending on the size of the property, and some superannuants have asked who should bear the cost.
Matthew Cranston
Economics Correspondent
Matthew Cranston is The Australian's Economics Correspondent based in Parliament House. He is an award winning journalist who previously covered the Trump and Biden administrations as White House Correspondent in Washington.