Valuations for tax and restructuring

Does every sale or restructure need a valuation?

No. The ATO's position is that you must obtain a market valuation when the tax law requires one. Its own list of common situations includes non-arm's length transactions such as transfers of property or shares between related parties, employee share schemes, small businesses testing the asset thresholds for the CGT concessions, and groups that consolidate for income tax. A sale to an unrelated buyer usually produces its own price; a restructure under a rollover may move assets at their existing tax cost.

Whether you need a valuation, for which asset and at what date, is for your accountant or tax adviser to decide. We do not give tax advice. When they decide a market value is needed, we prepare it, document the evidence and state the date, the interest valued and the basis, so the figure can be tested later if anyone asks.

Why do transfers inside an industrial group need market value?

Industrial businesses are often held through a group: an operating company that employs the staff and holds the contracts, an equipment entity that owns the plant and fleet and hires it back, a property trust that owns the factory, and a family trust or holding company that owns the shares. Moving any of these between related parties, such as shares from a founder to a family trust or the plant from the operating company into a new equipment entity, is not an arm's length dealing, and the ATO lists related-party transfers among the situations that may need a market valuation.

Plant adds a wrinkle. Machinery and vehicles are depreciating assets, and the ATO deals with gains on them, to the extent of business use, under the capital allowance rules as balancing adjustments rather than as capital gains. On a transfer of a whole business, how the value is split between plant, trading stock, goodwill and other assets therefore affects the tax outcome. We value the business and, where the engagement covers it, show how the value is spread across those classes. Item-by-item plant values are the job of a plant and machinery valuer.

How does a valuation support the small business CGT concessions?

There are four small business CGT concessions: the 15-year exemption, the 50% active asset reduction, the retirement exemption and the small business rollover. To reach any of them you first need to be an eligible entity, either a CGT small business entity with aggregated turnover under $2 million or by meeting the maximum net asset value test, and the asset has to pass the active asset test. Shares and trust interests face extra conditions.

Many manufacturers and engineering firms turn over more than $2 million, and for them the maximum net asset value test is the gate. Under it, the net value of the CGT assets of you, entities connected with you and your affiliates must not exceed $6 million just before the CGT event. Net value means market value less related liabilities and provisions for annual leave, long service leave, unearned income and tax. That last point matters in industrial businesses: a workforce of long-serving tradespeople and operators can carry large leave provisions, and they reduce net value. The $6 million limit is not indexed.

Where a group sits close to the limit, the valuation is the decisive evidence and has to cover every counted interest: the operating company, the equipment entity, the shares or units held, and the factory property, which needs a property valuer. Treasury's June 2026 small business explainer says all four concessions are staying, and that the turnover threshold for the 50% active asset reduction rises from $2 million to $10 million from 1 July 2027.

What do the 1 July 2027 CGT changes mean for valuations?

The changes are now law. From 1 July 2027 the 50% CGT discount for individuals, trusts and partnerships is replaced by cost base indexation and a 30% minimum tax rate on capital gains, and the new rules apply only to gains that accrue after that date. Treasury's explainer works the later gain from the asset's 1 July 2027 value. For an owner who will hold an industrial business or its shares across that date, a market value at 1 July 2027 may become relevant. Whether you need one, and how it is used, is for your tax adviser.

Two practical points. A valuation prepared today speaks to today's date, not to 1 July 2027; if your adviser wants a value at that date, it is prepared for that date, after it has passed, from information about that period. And the quality of that valuation will depend on the records kept at the time, so a proper stocktake and work in progress count at 30 June 2027, an up-to-date asset register and a clean set of year-end accounts are worth planning now.

How do restructures of industrial groups use valuations?

The small business restructure rollover lets an eligible small business, with aggregated turnover under $10 million, transfer active assets, including depreciating assets such as plant and trading stock, from one entity to another without an income tax liability, provided it is a genuine restructure of an ongoing business and the ultimate economic ownership of the assets does not change. Assets move at the transferor's tax cost, so the transfer itself may not need a market value for income tax. A valuation can still be needed: the ATO notes that stamp duty and GST consequences may arise, a new investor or key manager may be coming into the new structure, or ownership proportions may be changing, which takes the transaction outside the rollover.

Treasury's explainer also says the Government will provide a three-year window of rollover relief from 1 July 2027 for businesses that choose to restructure, for example into a company or a fixed trust. Check its status with your adviser before relying on it. If a restructure brings in employee shareholders, see employee equity on our services page.

What does the ATO expect a tax valuation to contain?

The ATO expects, at a minimum, the purpose and scope of the valuation, details of the asset valued, the valuation date and whether the valuation is retrospective, any inspection date, the records that explain the basis of value, and the value itself. It also expects the taxpayer to give the valuer clear written instructions, access to records and premises, independence to reach their own conclusion, and a fee that does not depend on the result. The ATO says that, generally, a taxpayer who engages and properly instructs a professional valuer will not be liable for penalties if that valuation is later found to be deficient.

Our engagement letter and report are built around those expectations. We do not say the ATO will accept any particular valuation; we make sure the reasoning and evidence are there to be tested. How we approach the valuation itself is on how we value industrial businesses.

What does a tax or restructuring valuation cost?

The fee follows the business's turnover; the bands are in the fee table below and on our pricing page. Tax work often needs more than one entity or date, such as the operating company and the equipment entity, or a transfer date and a later date: each additional entity is $795 + GST and each additional valuation date is $495 + GST. We confirm the fee in writing before we start. No hourly billing. Your accountant can also refer the matter to us.