CGT Reforms: what needs to done 1. Valuations & Benchmarks 2. Timing of Risk Assessment 3. Data-backed, compliant valuations 4. DMA & Workshop update
Data guidelines-standards ATO
IVS Council
While a valuation is an estimate of an asset’s value, it is important that the valuation is based on the most relevant & reliable information that is known, or could reasonably be foreseen, at the valuation date.
The Income Approach methodology requires a thorough industry & business specific risk analysis & assessment of financial data & non-financial KPI Drivers.
Be prepared
Industry review & business-specific risk analysis
To help ensure a future business valuation is compliant, accountants & SME advisers should complete & document a contemporaneous industry review & a businessspecific risk analysis as close as possible to the CGT business asset cost base date of 1 July 2027
The risk analysis should be supported by evidence, data & a consistent process, making it both replicable & defensible
Biggest Hidden Risk: Timing of Risk Assessment • The ATO requirement (Page 1 of the ATO’s Market Valuation for tax purposes dated February 2025) that a valuation is based on the most relevant & reliable information that is known, or could reasonably be foreseen, at the valuation date. • The IVS Council guidelines require the valuation reflects the risks associated with the future operations of the business (IVS 103 paragraph A20.29 and following).
Valuation Insights: CGT Reforms
• Putting these two guidelines together raises a critical compliance issue for future CGT business asset cost base valuations. • To ensure the business valuation is compliant, a risk assessment must be completed as close as possible to the CGT business asset cost base date - 1/7/2027. Avoid ATO Reviews The ATO lists (on page 10) common problems with valuations that attract their attention including: • Reliance on post-valuation date information & future events that cannot be reasonably foreseeable at the valuation date • Insufficient market evidence for inputs and assumptions • When used in litigation, evidence supported by contemporaneous documents is more likely to be accepted by Courts or Tribunals. • SME Owners need to complete a Risk Assessment now, save it, & then update it as close as possible to the business asset cost base date.
ANZSIC Categories & Evidence Based Data
Bstar Valuation Tool Workflow
RISK-PROFIT-VALUE DRIVER ASSESSMENT (RAVDA) INCLUDING VALIDATION
FINANCIALS (WITH ADJUSTMENTS)
REPORT GENERATION
Risk Assessment of Non-Financial Data
Risk Assessment Timing Every business client completes a RAVDA (minimum fee $1550 inc. GST)
• Existing clients process •
• •
•
Clients complete a Risk-Profit-Value Driver Assessment as close to 1/7/2027 Their Assessment is saved Reviewed by the valuer, using judgement & Data Mining App. data; a new updated copy is saved & date stamped This version is used for a future CGT business asset cost base valuation
• New clients post 1/7/2027 •
•
Use the Data Mining App. data filtered by a comparable asset cost base date range (1/1/2027 - 31/12/2027) to create the RAVDA Record as a limitation in the engagement letter
Like the SWOT framework, Michael Porter’s Five Forces model helps guide strategic planning by looking at the threats and opportunities a business faces. At its core, the model is a structured approach for competitive analysis and understanding the dynamics of an industry.
Data-backed, compliant valuations Strengthen independence & compliance
Before o
Discover any data limitations, set client expectations & identify due diligence drivers
o
Industry Financial Benchmarking data
o
Non-Financial Risk-Profit-Value Drivers & Concerns data
o
FME periods - decide, may need to access pre FME periods data
During o
o
o
Don’t accept client responses, use Data Mining App. data to strengthen independence Source comparable, ‘like for like’ data to challenge & support judgement decisions Use Top Performer reporting to investigate & validate key assumptions
End o o
o
Judgement + Data = Conclusion of Value Record key data assumptions & limitations in your valuation report Client signs a data Valuation Information Memorandum
Industry Benchmark Reports
Data Mining App Update • Expanding database & launch objectives • New engagement materials • Top Performer Insights • New Terms & Conditions effective late 2026
Non-Financial Benchmarks: Data Mining App. Reports