{"id":5480,"date":"2021-02-14T15:05:19","date_gmt":"2021-02-14T04:05:19","guid":{"rendered":"https:\/\/mnygroup.wpengine.com\/?p=5480"},"modified":"2025-02-01T17:22:08","modified_gmt":"2025-02-01T06:22:08","slug":"getting-a-tax-valuation-from-the-ato","status":"publish","type":"post","link":"https:\/\/mnygroup.com.au\/en\/getting-a-tax-valuation-from-the-ato\/","title":{"rendered":"Getting A Tax Valuation From The ATO"},"content":{"rendered":"<p><span style=\"color: #000000; font-size: 14.4px;\"><nav aria-label=\"breadcrumbs\" class=\"rank-math-breadcrumb\"><p><span class=\"last\">Home<\/span><\/p><\/nav><\/span><\/p>\n<blockquote><p>Not every individual situation fits neatly with the tax laws as they stand \u2014 sometimes a taxable item\u2019s known value (and therefore the tax that applies to it) may need to be determined.<\/p><\/blockquote>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"size-large wp-image-5481 aligncenter\" src=\"https:\/\/mnygroup.com.au\/wp-content\/uploads\/2021\/02\/Getting-a-tax-valuation-1024x546.png\" alt=\"Getting a tax valuation from the ATO\" width=\"1020\" height=\"544\" srcset=\"https:\/\/mnygroup.com.au\/wp-content\/uploads\/2021\/02\/Getting-a-tax-valuation-1024x546.png 1024w, https:\/\/mnygroup.com.au\/wp-content\/uploads\/2021\/02\/Getting-a-tax-valuation-300x160.png 300w, https:\/\/mnygroup.com.au\/wp-content\/uploads\/2021\/02\/Getting-a-tax-valuation-768x410.png 768w, https:\/\/mnygroup.com.au\/wp-content\/uploads\/2021\/02\/Getting-a-tax-valuation-1536x819.png 1536w, https:\/\/mnygroup.com.au\/wp-content\/uploads\/2021\/02\/Getting-a-tax-valuation-2048x1092.png 2048w\" sizes=\"auto, (max-width: 1020px) 100vw, 1020px\" \/><\/p>\n<p><span style=\"color: #000000;\">Many tax laws require the taxpayer to <a href=\"https:\/\/www.ato.gov.au\/General\/Capital-gains-tax\/In-detail\/Market-valuations\/Market-valuation-for-tax-purposes\/?page=2\" target=\"_blank\" rel=\"noopener\">determine the market value<\/a> of something. Common instances include:<\/span><\/p>\n<ul>\n<li><span style=\"color: #000000;\">for individuals \u2013 transfers of real estate or shares between related parties, such as family members<\/span><\/li>\n<li><span style=\"color: #000000;\">for employees \u2013 non-cash benefit transactions, such as gifts or other benefits such as car parking<\/span><\/li>\n<li><span style=\"color: #000000;\">for small businesses \u2013 transfers of assets to related parties, or passing the asset threshold tests for the small business capital gains tax concessions<\/span><\/li>\n<li><span style=\"color: #000000;\">for property developers \u2013 the GST margin scheme<\/span><\/li>\n<li><span style=\"color: #000000;\">for businesses \u2013 consolidation events<\/span><\/li>\n<li><span style=\"color: #000000;\">for all taxpayers \u2013 many anti-avoidance provisions.<\/span><\/li>\n<\/ul>\n<p><span style=\"color: #000000;\">Particularly for capital gains tax purposes, there are a number of instances where a valuation may be necessary. In doing this, there are two choices: <\/span><\/p>\n<ul>\n<li><span style=\"color: #000000;\">ask the ATO to provide the valuation, or<\/span><\/li>\n<li><span style=\"color: #000000;\">provide the ATO with a valuation of the item and ask it to confirm that valuation.<\/span><\/li>\n<\/ul>\n<p><span style=\"color: #000000;\">The ATO may take the option to use a professional valuer to undertake or review your own valuation. The valuer usually charges the ATO a fee, which the law allows it to pass onto you. Consequently, if you apply for a <\/span><span style=\"color: #000000;\">private ruling requiring a valuation, it is also required that you pay for the work of the valuer.<\/span><\/p>\n<p><span style=\"color: #000000;\">The ATO says that for tax purposes, the acceptability of a valuation usually depends on the valuation process undertaken rather than who conducted it. However, there are some exceptions. For example, only a professional valuer may undertake a market valuation for GST margin scheme purposes or for determining non-monetary consideration for GST purposes.<\/span><\/p>\n<h2 style=\"margin-left: .55pt;\"><span style=\"color: #000000;\">Acceptable valuations<\/span><\/h2>\n<p><span style=\"color: #000000;\">Except for the most straightforward valuation processes, valuations undertaken by people experienced in their field of valuation would be expected to provide more reliable values than those provided by non-experts.<\/span><\/p>\n<p><span style=\"color: #000000;\">According to legal precedent, experts who assess market value should have specific knowledge, experience and judgement in that particular field. While professional qualifications may add weight to the valuer\u2019s opinion, they should also display personal integrity and competence. To ensure the objectivity of the report, the valuer should be independent of the party commissioning the report.<\/span><\/p>\n<p><span style=\"color: #000000;\">The valuation process should be adequately documented; if it isn\u2019t, the ATO may not accept the resulting value as a market value.<\/span><\/p>\n<p><span style=\"color: #000000;\">Whenever the ATO uses a professional valuer, it will first give an estimate of how much the valuer will charge. This amount is generally required to be paid before the ATO will proceed. If however the valuation work has already started, it will generally be required that you pay for the work already undertaken.<\/span><\/p>\n<p><span style=\"color: #000000;\">If you provide the ATO with a valuation that meets the requirements set out in ATO guidance<a href=\"https:\/\/www.ato.gov.au\/general\/capital-gains-tax\/in-detail\/market-valuations\/market-valuation-for-tax-purposes\/\" target=\"_blank\" rel=\"noopener\"> <strong><em>Market valuation for tax purposes<\/em> <\/strong><\/a>, it will generally cost less to confirm it than to undertake a new valuation.<\/span><\/p>\n<p><span style=\"color: #000000;\">If the ATO decides that the valuation you have provided is not acceptable, before it issues a private ruling the ATO will ask if you want to either:<\/span><\/p>\n<ul>\n<li><span style=\"color: #000000;\">submit a new valuation for review, or<\/span><\/li>\n<li><span style=\"color: #000000;\">ask the ATO to provide the valuation.<\/span><\/li>\n<\/ul>\n<p><span style=\"color: #000000;\">You will need to pay any further costs the professional valuer charges to the ATO. And if the ATO does not receive any such advice, it generally will issue a private ruling stating that your valuation is not acceptable and that it will not provide an alternative valuation.<\/span><\/p>\n<h2><span style=\"color: #000000;\">What happens when applying for a private ruling about the value of an item?<\/span><\/h2>\n<p><span style=\"color: #000000;\">When the ATO receives an application for a private ruling that asks to determine or confirm the value of a thing, the following occurs:<\/span><\/p>\n<ul>\n<li><span style=\"color: #000000;\">if it needs to use a professional valuer, before it starts the valuation process it will tell you, and ask you to agree in writing, to use a professional valuer<\/span><\/li>\n<li><span style=\"color: #000000;\">it will ask for your input when selecting and instructing a valuer<\/span><\/li>\n<li><span style=\"color: #000000;\">it will ask the professional valuer to provide a quote for the work \u2013 either to value the thing, or to review the valuation that has been supplied<\/span><\/li>\n<li><span style=\"color: #000000;\">the ATO will provide a copy of the valuer\u2019s quote, which contains<\/span>\n<ul>\n<li><span style=\"color: #000000;\">the cost of their work<\/span><\/li>\n<li><span style=\"color: #000000;\">the time it will take to provide a report<\/span><\/li>\n<li><span style=\"color: #000000;\">any additional information they require to complete the work.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><span style=\"color: #000000;\">For complex valuation cases, the valuer may need to do the work in stages. In these situations, they will provide a quote for each stage before starting work on it. And before the valuer starts work, the ATO will ask you to:<\/span><\/p>\n<ul>\n<li><span style=\"color: #000000;\">pay the estimated amount for the relevant stage, and<\/span><\/li>\n<li><span style=\"color: #000000;\">provide any additional information the valuer requests.<\/span><\/li>\n<\/ul>\n<p><span style=\"color: #000000;\">Within 28 days of receiving the quote, you need to pay the quoted amount, which may be the whole amount or the amount for the stage in question.<\/span><\/p>\n<p><span style=\"color: #000000;\">The ATO generally does not ask the valuer to do the work until payment is received. Once the ATO receives your payment, it will:<\/span><\/p>\n<ul>\n<li><span style=\"color: #000000;\">ask the valuer to start the work, and<\/span><\/li>\n<li><span style=\"color: #000000;\">send you a receipt for your payment.<\/span><\/li>\n<\/ul>\n<p><span style=\"color: #000000;\">The receipt the ATO issues is also a tax invoice \u2013 for which you may be able to claim the GST included in the valuer\u2019s fee as a GST credit. Also note that as the cost of the valuation work is considered to be a cost of managing your tax affairs, it may be deductible for income tax purposes.<\/span><\/p>\n<p><span style=\"color: #000000;\">The ATO will tell you:<\/span><\/p>\n<ul>\n<li><span style=\"color: #000000;\">when the valuation is finished or confirmed, and<\/span><\/li>\n<li><span style=\"color: #000000;\">if there are any changes to the final cost of the valuation or review.<\/span><\/li>\n<\/ul>\n<p><span style=\"color: #000000;\">It will then either:<\/span><\/p>\n<ul>\n<li><span style=\"color: #000000;\">refund any extra amount you paid, or<\/span><\/li>\n<li><span style=\"color: #000000;\">ask you to pay any shortfall.<\/span><\/li>\n<\/ul>\n<p><span style=\"color: #000000;\">If there is a shortfall, this will need to be paid this before the ATO will provide your private ruling. Generally however, it can complete your private ruling within 28 days of receiving the valuer\u2019s report.<\/span><\/p>\n<p><span style=\"color: #000000;\">Private rulings involving a valuation may take longer than other private rulings because of the possibility of having to engage a professional valuer. Generally, the ATO will make contact within 14 days of receiving such an application to discuss an appropriate reply date.<\/span><\/p>\n<p style=\"text-align: center;\"><strong><a href=\"https:\/\/mnygroup.com.au\/\">www.mnygroup.com<\/a><\/strong><\/p>\n<p><span style=\"color: #999999;\"><em>This information has been prepared without taking into account your objectives, financial situation or needs. Because of this, you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation or needs.<\/em><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Not every individual situation fits neatly with the tax laws as they stand \u2014 sometimes a taxable item\u2019s known value may need to be determined.<\/p>\n","protected":false},"author":1,"featured_media":5481,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1691],"tags":[1410],"class_list":["post-5480","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-tax","tag-ato-administration","masonry-post","generate-columns","tablet-grid-50","mobile-grid-100","grid-parent","grid-20"],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/mnygroup.com.au\/en\/wp-json\/wp\/v2\/posts\/5480","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mnygroup.com.au\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mnygroup.com.au\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mnygroup.com.au\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mnygroup.com.au\/en\/wp-json\/wp\/v2\/comments?post=5480"}],"version-history":[{"count":0,"href":"https:\/\/mnygroup.com.au\/en\/wp-json\/wp\/v2\/posts\/5480\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mnygroup.com.au\/en\/wp-json\/wp\/v2\/media\/5481"}],"wp:attachment":[{"href":"https:\/\/mnygroup.com.au\/en\/wp-json\/wp\/v2\/media?parent=5480"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mnygroup.com.au\/en\/wp-json\/wp\/v2\/categories?post=5480"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mnygroup.com.au\/en\/wp-json\/wp\/v2\/tags?post=5480"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}