Unit trusts · From $299 + GST · 1-4 business days
Valuing the Property Behind Your Trust Units
A fund holding units in a property unit trust still has a property valuation problem. The unit price is only as defensible as the market value of the real property sitting underneath it.
How are units in a property unit trust valued for an SMSF?
The units take their value from the trust’s net assets, and where the main asset is property, that means the property must be valued at market value first. Auditors look through the unit price to the property evidence behind it, so a current, documented property valuation is what makes the unit figure defensible.
The accounting that converts a property value into a unit price belongs to the trust’s accountant. The evidence that property value rests on is what we prepare.
Where the value comes from
A Unit Is a Share of Something Real
Trustees sometimes treat units as a separate asset class with its own value, carried forward year to year. In a trust whose substantial asset is a single property, that is really a property valuation wearing a different label.
Work backwards and the chain is short. The unit price comes from the trust’s net asset value. The net asset value is dominated by the property. So if the property figure is stale or unsupported, every number downstream of it inherits the problem, including the fund’s reported member balances.
This is also why a unit price that has not moved in several years attracts attention. The ATO has been explicit that assets reported at an unchanged value across multiple income years are a flag, and unlisted trust interests were among the classes named in its March 2024 review of approximately 16,500 funds.
What the Auditor Asks to See
A current market value for the property, with 5 to 10 comparable sales itemised in full, the methodology stated and the evidence sources listed. The valuation date needs to line up with the accounts. If the property is leased to a related party, the rent also has to be on arm’s length terms, which is a separate piece of evidence covered in below-market rent and NALI. The general standard is in the complete guide.
The Holding Rules Are a Separate Question
Whether a fund may hold units in a particular trust, and how those units are treated under the in-house asset provisions of the superannuation law, is genuinely complex and depends on the trust’s structure, who controls it and what it does. We will not summarise those rules here, because a summary is exactly the wrong tool for them. Take that question to your accountant or adviser. What we can tell you is what the property is worth, and document it.
For accountants
Several Properties, One Invoice
Trusts holding more than one property, and practices administering several funds with unit trust structures, can order the underlying valuations together and be billed once. Turnaround stays at 1-4 business days per report.
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Unit trust questions
Common Questions, Answered
Do units in a unit trust need to be valued every year?
The fund reports the units at market value each time it prepares its accounts, and the unit value depends on what the trust owns. Where the trust's main asset is property, that means the property needs a current market value every year for the unit figure to hold up.
Does the auditor look at the trust or the property?
Both, but the property evidence is where the value ultimately comes from. An auditor asked to accept a unit price will want to see how the underlying property was valued, on what evidence, and as at what date. A unit price with nothing behind it is the same problem as a bare property estimate.
What do you provide, the unit valuation or the property valuation?
The property valuation. We prepare the market value report on the real property the trust owns, which is the input the trust's accountant uses to work out net asset value and the value of each unit. The unit calculation itself is accounting work, not valuation work.
Does it matter whether the trust is related or unrelated?
It matters a great deal to the superannuation rules that govern whether the fund can hold the units at all, and those rules are complex. It does not change how the underlying property is valued. Ask your accountant or adviser about the holding; we handle the property evidence.
What does a report on the trust's property cost?
The same as any other property: $299 + GST for residential and $425 + GST for commercial, delivered in 1-4 business days. If the trust owns several properties, ask about ordering them together.
General information about valuation evidence, not financial, legal or tax advice. Whether your fund may hold units in a given trust is a question for your accountant or adviser. See all property types we value.
Value the Property Behind the Units
Order a market value report on the trust's property and give the unit figure something to stand on. Delivered in 1-4 business days, no inspection required.