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Moving a trading business, a parcel of land or a block of shares between companies and trusts your family already owns still has a price in the eyes of the ATO and Revenue NSW. We fix that market value for the transfer date before the documents are signed, so the rollover conditions and the duty position rest on a figure you can defend.
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A restructure valuation sets the market value, on the transfer date, of each business, asset or interest passing between related entities. For a Newcastle or Hunter group, the federal rollover tests, Division 7A and NSW transfer and landholder duty under the Duties Act 1997 (NSW) all measure against that figure, so it needs to exist before signing.
Most Hunter restructures begin for a sensible reason: protect the workshop from trading risk, bring the next generation in, or get ready for a buyer or a new partner. The family's accountant usually drafts the documents, the same people sign for every entity and no money changes hands. In that setting nobody argues over the transfer price, so it often ends up as the book figure.
Tax and duty law does not accept that shortcut. Between related parties the capital gains provisions generally deem a transfer to happen at market value, and the rollovers that defer the gain set their conditions in market value terms. Division 7A asks again whenever a private company passes value to a shareholder or associate, and Revenue NSW, assessing transfer duty or landholder duty under the Duties Act 1997 (NSW), is not bound by the price the parties chose.
The missing figure costs nothing on the day and a great deal later. It comes up when the business is sold, when one branch of the family wants its share, when a lender reviews its security or when the ATO selects the group for review. By then a valuer has to reconstruct a market value for a date years past, from records that were never kept for that purpose.
We act for groups of every size across the region: an electrical contractor in Charlestown leaving sole trader status for a company, a fabrication business at Beresfield moving its sheds into a separate property trust, a Pokolbin family splitting vineyard land from the winery and cellar door, a mining services group in the Upper Hunter placing a holding company on top before taking in a partner. Your accountant, tax adviser and lawyer design the steps and choose the rollover. Our part is the figure each step relies on, and we defend it if it is ever questioned.
A certified valuer will listen to your situation and answer any questions you may have, at no cost.
Your advisers choose the rollover and settle the duty position. What they need from us is the number each of those decisions is tested against, and these four regimes are where that number gets used.
The rollovers that let a group change shape without crystallising a gain each test value in their own way. Some ask whether every owner's slice of market value is the same after the change as before; others weigh what goes out against what comes back. When loan accounts, share classes or holdings are uneven, neither comparison can be made without a value for each side.
Revenue NSW assesses duty under the Duties Act 1997 (NSW). Transfer duty can apply when NSW land or other dutiable property moves to a new entity, and landholder duty can apply when an interest in a company or unit trust holding NSW land is acquired, looking through to the value of the land rather than the price paid for the interest. Whether duty arises on each step is for your lawyer to confirm.
Value that leaves a private company for a shareholder or associate can be treated as a dividend. In a restructure this usually arises from an asset sold to a related entity below its worth, or from money moving between group entities with no complying loan agreement. A market value at the transfer date is the only measure of whether, and by how much, the price fell short.
Subdivision 328-G lets a small business entity move active assets into a new structure without a taxable gain, but only within a genuine restructure that leaves ultimate economic ownership where it was. If the owners' interests look different afterwards, for example units replaced by shares, the test is answered in value terms, and a valuation made at the time also helps show the change had a commercial purpose.
Other people lean on the same numbers: a minority shareholder whose percentage must hold, trust beneficiaries whose assets are moving, a lender whose security follows the business into a new entity, an employee with options and a landlord asked to consent to an assignment. For a retail shop lease, assignment is governed by the lease and the Retail Leases Act 1994 (NSW), and the NSW Small Business Commission can mediate if landlord and tenant cannot agree. An independent value shows each of them that nobody was quietly short-changed.
Land, vineyard blocks or workshop premises separated from the trading business well before any sale. A partner bought out, or a new one brought in. A holding company placed over an existing company or trust. A discretionary trust split, varied or vested. A business, a division, freehold or intellectual property shifted between entities. A group divided along family or business lines. Dormant companies and cross-holdings cleared out.
Each step is a separate transfer with its own date and its own subject: a whole business, a parcel of shares or units, or a single asset. A business is valued as a going concern, shares and units with the rights, restrictions and voting position they carry, and a single asset on its own merits. That last group often holds things no one has priced before, such as a trading name, a customer book, a software platform or the benefit of a lease.
Trading businesses are valued mainly through the income approach, capitalising the earnings a buyer could expect to maintain once owner wages, related-party rent and fees, and one-off items are put on an arm's length footing. Intangibles that never reached the balance sheet are valued with the same tools used after an acquisition, and the questions below explain the method for each. The point for a restructure is simple: if something with real value crosses at nil, CGT, duty and Division 7A can all be engaged at once.
The asset approach carries more weight in a restructure than in a sale, because so many Hunter groups restructure precisely to hold land apart from the trading entity: a truck depot at Maitland, fabrication sheds at Beresfield, vineyard blocks at Pokolbin. We value the business and the land separately and, where Revenue NSW is likely to want its own land evidence, work alongside a registered property valuer. The market approach then checks the business figure against real transactions, so the value used inside the group is one an arm's length buyer would recognise.
The steps are usually irreversible by the time these problems appear, most often during a sale, a family member's exit or a review by the ATO or Revenue NSW.
Most groups take a certified report, since restructure values may later be relied on by the ATO, Revenue NSW, a buyer or a lender. Before that point, while the family is still deciding whether to restructure at all, an Indicative valuation gives a reasoned starting figure for the conversation with your advisers.
Each report starts with a schedule of what moves, from which entity to which, on what date, and on what standard and premise of value. For every item it then shows the method, the inputs and the documents behind them, with intangibles valued one by one and their assumptions in plain view. Interests before and after a rollover are stated on one basis so the proportion test reads straight off the page, and land sits in its own section so the duty figure is never confused with the tax figure.
Years later, the reader may be a buyer's due diligence team, a lawyer for a family member who has since left, an ATO auditor, a Revenue NSW assessor or, if the owners fall out, a judge of the Supreme Court of New South Wales in Sydney, where expert reports must meet the court's expert evidence rules and the Expert Witness Code of Conduct. We write for that reader from the outset. A certified valuer signs the report, works through it with your tax adviser and lawyer while the steps are settled, and defends it if it is challenged.
Which condition does this step test in market value terms, what is that value on the day of signing, and where is the document that proves it? If any of the three is still open, the step is not ready, and a valuation done now can still change it.
Talk your situation through with a certified valuer before you commit to anything, at no cost.