Capital gains tax (CGT) events generally

Wherever market value is required

TD 10W: Capital Gains: What are acceptable valuations for CGT purposes?

TD 97/1: Income tax: property development: if land, originally acquired as a capital asset, is later ventured into a business of development, subdivision and sale, how is the market value of the land calculated at the time it is ventured into the business?

Capital gains tax (CGT) events generally

Transfers to related parties

Transferring real estate to family or friends

Capital gains tax (CGT) events generally

Defining an asset

TR 2004/13: Meaning of an asset for the purposes of Part 3-90 of the Income Tax Assessment Act 1997

Share buy-backs

Valuing shares in buy-backs

TD 2004/22: Income tax: for Off-Market Share Buy-Backs of listed shares, whether the buy-back price is set by tender process or not, what is the market value of the share for the purposes of subsection 159GZZZQ(2) of the Income Tax Assessment Act 1936?

PS LA 2007/9: Share buy-backs

Unlisted shares for ESS schemes

Form for completion by a registered company auditor.

Declaration of the value of unlisted shares

Trading stock

Valuation of land as trading stock in property development

Valuation of land that is ventured into a property development

TD 92/132: Income tax: property development: if land is trading stock, do related interest costs, council rates and land taxes, form part of the cost price for trading stock valuation purposes?

TD 97/1: Income tax: property development: if land, originally acquired as a capital asset, is later ventured into a business of development, subdivision and sale, how is the market value of the land calculated at the time it is ventured into the business?

Allocation of value to underlying assets

Disposals and transfers of more than one asset for a single undivided amount

TD 9: Capital gains: How do you apportion consideration received on the disposal of a composite asset?

GST margin scheme

Taxable supplies of real property

GSTR 2000/21: Goods and services tax: the margin scheme for supplies of real property held prior to 1 July 2000

GSTR 2006/7: Goods and services tax: how the margin scheme applies to a supply of real property made on or after 1 December 2005 that was acquired or held before 1 July 2000

GSTR 2006/8: Goods and services tax: the margin scheme for supplies of real property acquired on or after 1 July 2000

Consolidated entities

Consolidation events generally – including entries, exits, cost base setting and determining the allowable fraction

TR 2005/17: Income tax: goodwill: identification and tax cost setting for the purposes of Part 3-90 of the Income Tax Assessment Act 1997

TD 2007/1: Income tax: consolidation: in working out the market value of the goodwill of each business of an entity that becomes a subsidiary member of a consolidated group, should the value of related party transactions of each business of the entity be recognised on an arm's length basis?

TD 2007/27: Income tax: consolidation: is the cost base of the goodwill referred to in subsection 711-25(2) of the Income Tax Assessment Act 1997 limited to the cost base of goodwill under subsection 705-35(3) of that Act?

Self-managed superannuation funds

Valuing fund assets

Valuation guidelines for self-managed super funds

Research and development concession

Value of contributions to R&D

IT 2451: Income tax: Investor funding of research and development activities – paragraphs 12-14

Fringe benefits tax

Car parking fringe benefits

TR 96/26: Fringe benefits tax: car parking fringe benefits – paragraphs 46 and 50

Real property:

All types of land, with or without buildings and improvements

Rights associated with land, including leases and licences to occupy

First element of cost base under ss110-25(2) ITAA 1997

Capital proceeds using the market value substantiation rule: s116-20 ITAA1997

TD 97/1: Income tax: property development: if land, originally acquired as a capital asset, is later ventured into a business of development, subdivision and sale, how is the market value of the land calculated at the time it is ventured into the business?

TR 97/25: Income tax: property development: deduction for capital expenditure on construction of income producing capital works, including buildings and structural improvements

TD 92/132: Income tax: property development: if land is trading stock, do related interest costs, council rates and land taxes, form part of the cost price for trading stock valuation purposes?

Transferring real estate to family or friends

Direct comparison.

Capitalisation of net income.

Discounted cash flow analysis.

Real property:

GST margin scheme

Taxable supplies of real property

GSTR 2006/7: Goods and services tax: how the margin scheme applies to a supply of real property made on or after 1 December 2005 that was acquired or held before 1 July 2000

GSTR 2006/8: Goods and services tax: the margin scheme for supplies of real property acquired on or after 1 July 2000

GSTR 2000/21: Goods and services tax: the margin scheme for supplies of real property held prior to 1 July 2000

GST margin scheme valuation requirements determination MSV 2005/1

GST margin scheme valuation requirements determination MSV 2009/1

Direct comparison.

Capitalisation of net income.

Discounted cash flow analysis.

Real property:

GST margin scheme

Margin scheme valuation

GST margin scheme valuation requirements determination MSV 2015/53 extends the cost of completion method in MSV 2000/2 to partly completed premises supplied on or after 1 July 2005

Other MSVs may apply to prior periods not covered under MSV 2009/1 and MSV 2015/53 – see GST and the margin scheme

Plant and equipment 

Going concern – based on optimised depreciated replacement cost.

Disposal of surplus assets/orderly realisation of assets: based on auction realisable value less costs of sale.

Business 

First element of cost base under ss110-25(2) ITAA 1997

Capital proceeds using the market value substantiation rule: s116-20 ITAA 1997

CGT rollovers

Asset sales or divestments

Cost base setting

Entries into consolidated groups

Exits from consolidated groups

Thin capitalisation

Common specific approaches:

• comparable transaction
• comparable trading
• capitalisation of earnings
• discounted cash flow, and
• calculation of net assets.

(These methods will often overlap.)

Securities:

Equity

Hybrid

Debt

CGT rollovers

Cost base setting

Entries into consolidated groups.

Exits from consolidated groups.

TD 2004/22: Income tax: for off-market share buy-backs of listed shares, whether the buy-back price is set by tender process or not, what is the market value of the share for the purposes of subsection 159GZZZQ(2) of the Income Tax Assessment Act 1936?

PS LA 2007/9: Share buy-backs

Common specific approaches:

• business valuations adjusted for the relevant security interest
• trading benchmarks (eg VWAP/closing price)
• security based discounted cash flow.

Intangible assets:

Identifiable intangible assets

Intellectual property

Goodwill

General examples can include:

CGT rollovers

Asset sales or divestments

Cost base setting

Entries into consolidated groups

Exits from consolidated groups, and

Capital allowance issues relating to IP.

TR 2005/17: Income tax: goodwill: identification and tax cost setting for the purposes of Part 3-90 of the Income Tax Assessment Act 1997

TD 2007/1: Income tax: consolidation: in working out the market value of the goodwill of each business of an entity that becomes a subsidiary member of a consolidated group, should the value of related party transactions of each business of the entity be recognised on an arm's length basis?

TD 2007/27: Income tax: consolidation: is the cost base of the goodwill referred to in subsection 711-25(2) of the Income Tax Assessment Act 1997 limited to the cost base of goodwill previously identified under subsection 705-35(3) of that Act?

TR 1999/16: Income tax: capital gains: goodwill of a business

Common specific approaches:

• comparable transaction
• incremental income
• excess earnings
• relief from royalty
• replacement/reproduction cost, and
• simulation analysis.

Off-market takeovers

ITAA 1997:

• subsection 124-800(1)
• subsection 116-20(1)
• subsection 124-790(1)
• para 110-25(2)(b)
• TD 2002/4

From the time that the bid becomes unconditional, closing price at the time of acceptance, up to and including the deemed effective date of compulsory acquisition

Merger/scrip restructure via a scheme of arrangement

ITAA 1997:

• subsection 124-800(1)
• subsection 116-20(1)
• subsection 124-790(1)
• para 110-25(2)(b)
• subsection 124-780(5)

1-day volume weighted average price (VWAP) on implementation date of scheme.

Demergers

ITAA 1997:

• section 125-70
• section 125-80
• TD 2006/73

For cost base allocation – five-day VWAP from the commencement of trading.

Equal capital reductions

ITAA 1997:

• subsection 116-30(3A)

Closing price or 1-day VWAP or 5-day VWAP.

Selective capital reductions

ITAA 1997:

• subsection 116-30(3A)

Establishment of market value under ss 116-30(3A).

Employee share acquisition schemes

ITAA 1936:

• former section 139FB

Establishment of arm's length value under former s 139FB of the ITAA 1936 which has continued application under the IT(TP)A 1997.

Off-market buy-backs

ITAA 1936:

• subsection 159GZZZQ(2)
• section 159GZZZM
• TD 2004/22
• PS LA 2007/9

Establishment of market value under ss 159GZZZQ(2) of the ITAA 1936.