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How does a self managed superannuation fund (SMSF) determine the market value of listed shares for reporting purposes?

The market value of listed shares should be determined under section 10 of the Superannuation Industry (Supervision) Act 1993 (SISA) and section 139FA of the Income Tax Assessment Act 1936 (ITAA 1936).

The SMSF owns shares that are listed on the Australian Stock Exchange.

The market officially closed at 4.00 p.m. on the last trading day of the financial year with the best price available to the general public.

There was some unofficial trading in the listed shares with closing prices, as at 4.15 p.m., that were printed by the press.

The opening prices on the next trading day were the same as the official closing prices as at 4.00 p.m. on the previous trading day.

For the purposes of reporting requirements, section 10 of the SASA provides the definition of 'market value' in relation to an asset as the amount that a willing buyer of the asset could reasonably be expected to pay to acquire the asset from a willing seller.

The SISA does not further clarify market value, as it relates, to shares for reporting purposes.

For the purposes of reporting for income tax, subsection 139FA(1) of the ITAA 1936 provides the method by which to determine the market value of a listed share or right on an approved stock exchange. The market value of a share under subsection 139FA(1) is: • If there was at least one transaction on an approved stock exchange in those shares in the week up to and including the last trading day (of the financial year) - the weighted average of the prices at which those shares were traded on the approved stock exchange during that week; or • If there were no such transactions in the week up to and including the last day of the financial year - the last price at which an offer was made on the approved stock exchange in that period to buy such a share, or if no such offer was made, the value of the share determined as if section 139FB applied to the share.

The rules in subsection 139FA(1) of the ITAA 1936 are mandatory for shares or rights acquired on or after 12 December 1996.

An 'approved stock exchange' is defined section 139GD of the ITAA 1936.