Small Business CGT Concession Evidence | IBV™

Prepare an entity chart showing companies, trusts, partnerships and the interests held by relevant parties. Provide share classes, unit rights, agreements and related party balances. Ask which interests the adviser needs valued and whether assets outside the trading entity need separate consideration. Do not treat the trading business and the owners’ wider financial position as the same subject.

Retain instructions, executed agreements, contemporaneous forecasts and explanations of unusual transactions. Record who supplied each important fact. An adviser should be able to trace an amount in the valuation to its supporting record and see which assumptions came from management. Missing records or unresolved differences should be disclosed rather than hidden in a broad assurance.

Request a report with the subject interest, purpose, effective date, methods, assumptions, financial reconciliation and limitations clearly stated. An ownership and asset inclusion schedule can help the adviser connect valuation findings to their separate legal analysis. That connection is useful evidence management, not a certification that every statutory requirement has been satisfied.

Small business CGT concession work can involve several different legal and measurement questions. A business valuation addresses an instructed asset or interest at a specified date. It does not determine every condition for access to the concessions, select a concession or confirm how a tax return should be prepared. Those responsibilities remain with the taxpayer and their appropriately qualified adviser.

Ask the adviser to describe precisely where valuation evidence fits their analysis. They may need the market value of shares, a business asset or another interest, while other conditions require evidence about ownership, business use and relevant periods. Establishing that distinction reduces the risk of commissioning a whole-business report when a different or wider measurement is required.

Do not work backwards from a desired tax result. The valuation should assess the relevant evidence independently, not select assumptions because they produce a preferred figure. A value conclusion is useful only when its subject, date and reasoning can be traced and its limitations understood.

The maximum net asset value test is one pathway to satisfying the basic eligibility conditions for the small business CGT concessions, generally an alternative to the aggregated turnover test and subject to the other qualifying conditions. It generally requires the combined net value of relevant CGT assets to be no more than $6 million immediately before the CGT event. The calculation may include assets and liabilities of connected entities and affiliates, subject to statutory exclusions, so a valuation of the trading business alone may be insufficient. The ATO explains the test as one of the relevant eligibility conditions, and its application involves identifying the assets, liabilities, entities and exclusions that the law requires.

Ask the adviser which market values are needed and at what date. Then agree the scope for each measurement and identify dependencies on other professionals. If a business report relies on a separate property valuation, record its subject and effective date so the adviser can see whether the pieces fit together.

Avoid treating book balances as automatic substitutes for market values or simply adding every figure in the pack. Some economic components may already be reflected in a valuation conclusion. Clear inclusion schedules and reconciliations help the adviser identify potential gaps and overlaps without asking the valuer to determine the statutory calculation.

Where shares or trust interests are being assessed, additional eligibility requirements may apply, including tests involving the market value of underlying active assets and ownership participation. The tax adviser should identify which measurements are required, as valuing the operating business or its shares does not establish these conditions by itself. That is one reason the adviser needs to establish the valuation scope beforehand.

The active asset test asks a different question from “what is this business worth?” Its application concerns relevant conditions including how assets have been used and the applicable periods. A supported market value does not by itself establish that those conditions are satisfied.

Provide acquisition and disposal records, ownership history and dated evidence of use where the adviser requests it. Documents might include leases, business records, agreements and correspondence explaining changes in activity. Keep factual descriptions precise: who used the asset, for what purpose and during which period? Let the adviser apply the legal test to that evidence.

If a premises arrangement or business activity changed over time, preserve the chronology. A current description may not explain historical use. Where records are incomplete or dates are disputed, identify the issue rather than presenting a confident conclusion based only on present recollection.

Financial statements are a starting point, but the valuation may require management accounts and supporting schedules. Explain unusual trading periods, owner remuneration, related-party rent and exceptional costs. Proposed earnings adjustments should have a source, an economic rationale and a stated treatment rather than appear as unexplained additions to profit.

List assets required for operations separately from those considered non-operating. Describe relevant debt, cash and related-party balances, including documented terms where available. A conclusion about operating value and a conclusion about company equity are not interchangeable; the report should show the reconciliation appropriate to the instructed subject.

Separate loans from trading balances and explain discrepancies between ledgers and signed accounts. A related-party amount may require investigation of its nature, recoverability or terms. Its tax treatment is a separate question. Supplying the underlying documents allows each professional to address their own part of the assignment.

Retain the written instruction, agreements, amendments, relevant offers and evidence of the circumstances surrounding the transaction. Record what rights or assets move, when they move and which terms affect consideration. An agreed amount between connected parties is not automatically independent evidence of market value.

Keep an index showing the source of each material record and any unresolved questions. Link financial schedules to original accounts and label drafts or management-prepared reconstructions. If a specialist opinion is supplied, retain the full document and its limitations rather than extract only the final number.

The ATO's record-keeping guidance is useful context for maintaining CGT asset and valuation records. Ask your adviser how its requirements apply to your circumstances. A neatly presented report cannot repair an incomplete transaction trail or guarantee acceptance of a claim.

Before finalising the engagement, confirm who will review the report alongside the tax analysis and whether additional measurements are needed. Share scope questions early so the valuation and advice are aligned to the same transaction and date.

Read preparing for a CGT valuation for document organisation and retrospective CGT valuation evidence where a past date applies. The objective is evidence the adviser can inspect and connect to the relevant tests, not a promise that obtaining a particular report secures a concession.

Tax legislation and its application require review by an appropriately qualified adviser at the time of the transaction. No future tax treatment or reset entitlement is assumed here. Explore CGT concession valuation support and the central fees page. Many standard valuations can be completed within approximately 5–7 business days once all required information, clarifications, signed engagement documents and payment have been received. The expected timeframe is confirmed before work begins.