The rules in Division 83A of the Income Tax Assessment Act 1997, which deal with ESS interests acquired under an ESS, do not define market value - nor do they prescribe any method for determining the market value of a listed share acquired under an ESS.
Market value is therefore given its ordinary meaning. The increased flexibility that this provides means taxpayers are able to choose a valuation methodology that fits their circumstances and has the lowest compliance costs.
We will accept any reasonable method for determining the market value of listed shares in particular circumstances.
The following information provides examples of valuation methods for particular circumstances that we consider reasonable.
A listed share is registered on a recognised exchange such as the Australian Securities Exchange (ASX).
As listed shares are commonly traded on a daily basis, you may be able to rely on the appropriate share market as the source for valuing a listed share.
When you value a listed share, we would expect you to take into account a number of factors in addition to the listed price. These are:
- valuation changes resulting from company capital structural events or changes in retained earnings (for example, as a result of dividend payments)
- the period to which the valuation applied.
Former Division 13A of Part III of the Income Tax Assessment Act 1936 (the former ESS rules) prescribed a number of methods for valuing listed shares. It is reasonable to use these methods for valuing listed shares.