Key takeaways
Identify exactly which assets or shares are changing hands
A share sale and a sale of business assets can involve different rights, debts and owners, even when both describe the same business. List what transfers, what stays behind and any separate shareholder loans so the valuation addresses the actual transaction.
Keep the evidence available at the historical valuation date
A historical valuation should reflect information a purchaser could have assessed at that time, rather than simply using the latest forecast or eventual results. Preserve dated forecasts, contracts and accounting records, and explain later corrections separately so hindsight does not replace the original uncertainty.
Explain how business value becomes the value of shares
A value based on operating earnings may still need adjustments for cash, borrowings, shareholder funding and normal working capital before it represents share value. Request a clear reconciliation showing the evidence for every adjustment and confirming that no balance has been counted twice.
Check deal conditions before relying on headline prices
An offer or completed sale may include deferred payments, performance conditions, warranties or continuing employment that change what its headline price means. Compare the rights and terms with your own transaction before using that price as evidence of the value of your interest.
Keep capital gains tax calculations separate from market value
A market valuation supports a defined measurement, but does not itself establish the cost base or tax treatment for capital gains tax. Ask your tax adviser to specify the required asset and date, and retain acquisition costs and other tax records in a separate schedule.
Start with the tax question
A CGT valuation should answer a defined question, not simply attach a current price to an old transaction. Ask your accountant to identify the relevant event, asset, interest and valuation date. The engagement can then distinguish an operating business from shares, trust units or selected assets, and identify whose interest is being assessed.
Build the date-specific record
Useful records include financial statements, tax reconciliations, ownership documents and transaction agreements. Historical instructions may also need management accounts, contracts and correspondence from the relevant period. Explain gaps in the record early. A present-day forecast is not automatically evidence of what a purchaser could reasonably have expected at an earlier date.
Explain the valuation bridge
The analysis considers maintainable earnings, operating assets, business risks and available market evidence. Where shares or units are being valued, debt, surplus assets and ownership rights need separate attention. Any earnings adjustments should be traceable to supporting records, with a clear explanation of why the selected method suits the business and the instructed date.
Signed
A clear valuation conclusion starts with an agreed purpose, relevant evidence and disclosed assumptions. The report identifies the interest valued and explains the reasoning behind its conclusion.
Provide an adviser-usable report
The proposed deliverable records the subject interest, purpose, date, information relied on and valuation reasoning. It explains significant assumptions and limitations alongside the conclusion. Your accountant can use that evidence within their tax analysis, rather than treating an unexplained headline figure as a substitute for the supporting commercial and financial record.
Keep tax conclusions separate
A valuation does not determine whether a CGT event occurred, establish a tax cost base by itself or confirm access to a concession. Those questions belong with your tax adviser. Where an earlier date is required, retrospective valuation can be scoped around the evidence available for that period.
Separate the disposal asset from the operating enterprise
A share disposal and an asset sale can describe the same commercial business but require different valuation conclusions. In a share disposal, the purchaser acquires the company's rights and exposures through the security. In an asset transaction, specified contracts, equipment, intellectual property and goodwill may transfer while cash, borrowings and historical obligations remain behind. A comparison drawn from the wrong transaction type can distort the conclusion before any multiple is selected.
Prepare an asset perimeter showing legal owner, intended recipient, included liabilities and excluded property. Identify whether a shareholder loan transfers separately from shares. Record any premises owned personally rather than by the company. These distinctions are particularly important when a sale agreement allocates one headline amount across several owners or assets.
Reconstruct the information a purchaser could have assessed
For a historical CGT date, retain the forecast version available then, not just the workbook most recently updated. Compare its assumptions with signed orders, customer renewal correspondence, staff capacity and funding facilities existing at that time. A later result may help explain an earlier condition, but should not automatically replace the uncertainty market participants faced.
Create an evidence chronology separating documents created before the valuation date from later explanations. Where management accounts were subsequently corrected, identify the underlying error and whether the corrected information could reasonably have been known. Missing monthly accounts, undocumented cash receipts and reconstructed owner remuneration are limitations to disclose, not reasons to insert precise-looking estimates without support.
Test the enterprise-to-equity reconciliation
An earnings method commonly produces an operational value that still needs reconciliation to the shares being assessed. The treatment of cash, external debt, shareholder funding and working capital must follow the selected method. Cash required to meet payroll is not necessarily surplus, and an overdue tax balance should not disappear simply because it sits outside the loan schedule.
For example, a business with seasonal inventory purchases may require cash at the measurement date to fund its normal trading cycle. Removing all cash while assuming fully funded operations can overstate distributable value. Equally, deducting a debt already reflected in the cash flows can understate equity. Ask for a bridge in which every adjustment identifies its source and confirms that it has been counted only once.
Use transaction evidence without importing incompatible terms
A recent offer or capital raising can be informative, but compare what the other party actually obtained. Deferred consideration, earn-outs, warranties, vendor finance and continuing employment can make a quoted price different from an unconditional cash value. An offer for control may also be a poor direct comparison for a restricted minority parcel.
Keep executed agreements and contemporaneous negotiation records alongside announcements or broker summaries. Explain whether a proposed transaction completed, why it failed and whether its terms changed. Industry comparisons should identify the earnings definition and assets included. A turnover multiple with no evidence about margins or working capital is not a substitute for a reasoned assessment of this particular interest.
Keep the valuation conclusion distinct from the CGT calculation
The ATO's market valuation guidance calls for objective, supportable evidence and recognises that the relevant market value meaning can depend on the provision. Your tax adviser should therefore identify the required statutory question and date rather than asking the valuer to assume that the contract date, settlement date and reporting date are interchangeable.
Preserve a separate tax schedule for acquisition expenditure, incidental costs, improvements and any earlier adjustments. Those amounts do not become market value merely because they appear in a cost-base calculation. Conversely, a market value conclusion does not automatically replace a historical cost base. A report can support the instructed measurement while leaving CGT event identification, substitution rules, exemptions and return calculations to the adviser.
For a private company, our company valuation services explain how operating-business value, company equity and the particular ownership interest fit together.
Scope, fees and timing
See our fixed-fee valuation packages and confirm the scope and fee before commissioning work. Confirm the purpose, intended users, information requirements and inclusions in a written engagement before work begins. Calculated Value and Limited Scope delivery is 5–7 business days from complete financial information and a signed engagement. Full Conclusion timing is confirmed individually in the engagement letter. Specialist requirements or changes to the instruction may affect suitability and timing; confirm these before relying on an external deadline.
Sources and further reading
Frequently asked questions
When might a business interest need a valuation for CGT?
A valuation may be needed where tax rules require market value, including some non-arm's length transfers and concession tests. Your accountant should identify the applicable provision before commissioning work. The brief then specifies the business, shares or units, the required date and purpose, rather than assuming every sale requires the same valuation evidence.
Source: ATO — Market valuation of assets
Is the CGT valuation date always the settlement date?
No. For a sale under a contract, the ATO generally identifies the CGT event time as when the contract is entered into, not settlement. Other events can have different timing rules. Have your tax adviser confirm the event and measurement date before the valuation is instructed, particularly where signing and completion fall in different income years.
Source: ATO — CGT events
Can you value a business at a date several years ago?
A retrospective valuation can be considered if sufficient relevant evidence is available. Supply accounts, ownership documents, contracts and market information relating to the historical date. The analysis should use what was known or reasonably foreseeable then, not simply apply today's trading results. Missing historical records may materially restrict the methods or conclusion available.
Do family members' agreed transfer prices establish market value?
Not necessarily. A price agreed between related parties is not automatic evidence of an arm's length market value. Your accountant should confirm whether tax law substitutes market value in the particular circumstances. An independent assessment can document the relevant interest and evidence without determining the ultimate tax treatment of the transfer.
Source: ATO — Market valuation of assets
What information is needed for a private share CGT valuation?
Provide the share register, constitution, shareholder agreements, financial statements and details of debt and surplus assets. Identify the class and number of shares and the relevant date. Rights and restrictions may mean the value of a particular holding differs from a simple percentage of operating business value, so the subject must be precisely defined.
Can the balance sheet be used instead of a valuation?
Accounting figures may not represent market value, particularly where goodwill, historical asset costs or unrecorded rights are significant. A valuation considers appropriate methods and evidence for the defined subject. Your accountant should confirm whether market value is required; selecting a convenient book figure does not establish that the relevant tax requirement has been met.
Source: ATO — Market valuation of assets
What should a CGT valuation report explain to my accountant?
It should identify the purpose, asset or interest, relevant date, valuation basis, evidence and methods, with assumptions and limitations made clear. A useful report links the reasoning to the conclusion rather than providing a number alone. Your accountant then applies the tax rules, including cost base and eligibility questions that the valuation does not decide.
Will commissioning an independent valuation prevent an ATO review?
No. Independent preparation does not guarantee acceptance or prevent questions about evidence, methods or assumptions. The ATO expects an objective, supportable valuation and may review it. Keep the underlying records and tax advice, and ensure the instructed purpose and date match the transaction rather than treating a signed report as protection against all valuation risk.
Source: ATO — Market valuation of assets
Does the report calculate my capital gain and tax payable?
Not as part of a valuation-only instruction. The report provides value evidence for the specified subject and date; the tax calculation may also involve proceeds, cost base, losses and applicable concessions. Your tax adviser should determine those amounts and rules. A concluded market value is not, by itself, your taxable gain or final tax liability.
Source: ATO — CGT events
How do I commission the right report before a tax lodgment deadline?
Ask your accountant to confirm the tax purpose, interest and valuation date, then provide the transaction documents and available records. IBV agrees a Fixed Professional Fee upfront. Standard delivery is 5–7 business days after complete records and signed engagement. Allow time for your accountant's separate review before lodgment. This 5–7 business-day timetable applies to Calculated Value and Limited Scope only; Full Conclusion delivery is confirmed individually in the engagement letter.
Source: ATO — Market valuation of assets
A clear, independent view of value — with the evidence behind it.
- Understand the conclusion — and what drives value.
- Gain an independent perspective. Move forward with confidence.
- Benchmark your business against industry performance.
- Identify strengths, risks and opportunities through SWOT analysis.
WHAT YOU GET IN A LIMITED SCOPE VALUATION REPORT
Inside your IBV™ report
Executive Summary
Conclusion of value · Method selected · Valuer qualifications
Detailed Report
Maintainable earnings · Cap rate / multiple · Premise of value
The Evidence Pack
SWOT analysis · Top Performers Report · RAVDA score
APES 225 voluntarily aligned. Report depth and supporting analysis follow your agreed package and engagement scope.
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