Early engagement is key ahead of valuation requirements

“My real concern is that if someone's in the market offering a cheap, quick turnaround valuation, it is most likely they will not comply with [that] guidance.”

Marke said that although there are reputable self-valuation platforms, it is better done by a qualified professional.

“My concern is if it's a [platform where you] plug some inputs in, and it spits out a number, then the requisite amount of consideration and thought might not have gone into it to support a position with the ATO later down the track.”

In the event of an ATO investigation or dispute, it would be harder to do a retrospective valuation following a self-service valuation as information could get lost and providers may move on.

“It does make it much more difficult for a taxpayer to support the valuation if it is disputed down the track by the ATO,” Marke said.

“It is a lot of time, it's a lot of effort, and it can involve a lot of expenses.” 

Engaging a valuation specialist, Marke said, would prevent these things from happening.

“Do you want to pay an extra $10,000 now to $50,000 now and save yourself any potential future headaches, or do you want to take a lower-cost option now and run the gauntlet?

“That's really a decision for taxpayers and business owners.

“It's really, A, giving you better information to make a decision from [with] more robust information and, B, reducing your exposure to potential risk of dispute from the ATO.”

No law for valuations

While there is no law around how valuation should be prepared, the ATO provides a 20-page guidance called the ATO market valuation guide.

Marke said this is where engaging a specialist to follow this guide comes in.

“What we've been communicating with our client base is, if you want to be in a position where you have a robust and reliable valuation, it needs to be in accordance with that guide because that is the only real communication from the ATO in relation to valuations.

“It's quite detailed; it references the international valuation standards, and it references the Australian standard of APES 225 for valuation services by accountants.

“I would definitely advise clients to be talking to accountants or business advisers early.”

Marke said accountants could help by looking at clients considering an exit or succession event in the short term, identifying business clients that will be impacted by the CGT reforms, and understanding whether the reforms might affect timing changes to sell the business or pass it down to the family.

“All those considerations have now got an extra lens over them. So that's really what we're doing: making sure we're understanding where the client is at and then giving them some information to then plan accordingly.”