Taxation Valuations
PP&E Valuations provide professional property, plant and equipment valuation services for taxation purposes.
The benefits of obtaining an independent valuation include:
PP&E Valuations have undertaken valuations for a wide range of tax related issues, in particular tax consolidation, stamp duty and land tax.
The cost of obtaining valuations for taxation purposes may be deductible as a tax-related expense for the purpose of section 25-5 of the Income Tax Assessment Act 1997. You should consult your tax adviser in relation to your specific circumstances.
The benefits of obtaining an independent valuation include:
- Optimise your tax outcomes; and
- Manage and mitigate audit risks.
PP&E Valuations have undertaken valuations for a wide range of tax related issues, in particular tax consolidation, stamp duty and land tax.
The cost of obtaining valuations for taxation purposes may be deductible as a tax-related expense for the purpose of section 25-5 of the Income Tax Assessment Act 1997. You should consult your tax adviser in relation to your specific circumstances.
Tax Consolidation
Market valuations are often required by companies for tax consolidation purposes to determine new tax costs for the assets of a joining entity, and the cost base of membership interests in a leaving entity (the cost setting process).
The cost setting process allocates the cost of the membership interests in the subsidiary to the assets it brings into the group in proportion to their market values.
The following extract from section C4-1 Market Valuations of the ATO published Consolidation Reference Manual outlines the taxpayer’s responsibilities and highlights the importance of obtaining accurate valuations from appropriately qualified, independent valuers.
As with any aspect of income tax law, the Commissioner of Taxation will have a statutory obligation to ensure compliance with the market valuation requirements of the consolidation regime and to form a view as to whether an adjustment should be made to a taxpayer’s taxable income on the grounds that it has been based on an inaccurate valuation.
In the event of a dispute with the Tax Office, the taxpayer must prove that a disputed assessment is excessive. This is the case whether the taxpayer is seeking a review of an assessment or is appealing against an objection decision.
The taxpayer must not only show that the assessment is wrong, but must also positively establish what correction should be made in order to make it right or more nearly right.
In the event of a dispute, appropriate record keeping will help taxpayers meet the burden of proof. And they will be in a better position if they can demonstrate that the market valuations they have relied on were based on reports commissioned in a transparent manner from independent and qualified valuers.
The availability of such reports will help the taxpayer communicate their position to the Tax Office, establish the credibility of valuations, and reduce the risk of tax audits and adjustments.
The valuers of PP&E Valuations have extensive experience in undertaking market valuations for tax consolidation purposes across a wide range of industries. Many major corporations have relied upon PP&E Valuations to determine market values for tax consolidation purposes, whether it be due to organisational restructuring or after a merger or acquisition.
We are fully aware of the requirements of the ATO Guidelines and always tailor our service to afford our clients complete comfort against any audit in the most cost effective manner.
In addition to determining the appropriate market values, we are expert in allocating the market value to the underlying assets of the asset register in a manner which can be easily audited.
The cost setting process allocates the cost of the membership interests in the subsidiary to the assets it brings into the group in proportion to their market values.
The following extract from section C4-1 Market Valuations of the ATO published Consolidation Reference Manual outlines the taxpayer’s responsibilities and highlights the importance of obtaining accurate valuations from appropriately qualified, independent valuers.
As with any aspect of income tax law, the Commissioner of Taxation will have a statutory obligation to ensure compliance with the market valuation requirements of the consolidation regime and to form a view as to whether an adjustment should be made to a taxpayer’s taxable income on the grounds that it has been based on an inaccurate valuation.
In the event of a dispute with the Tax Office, the taxpayer must prove that a disputed assessment is excessive. This is the case whether the taxpayer is seeking a review of an assessment or is appealing against an objection decision.
The taxpayer must not only show that the assessment is wrong, but must also positively establish what correction should be made in order to make it right or more nearly right.
In the event of a dispute, appropriate record keeping will help taxpayers meet the burden of proof. And they will be in a better position if they can demonstrate that the market valuations they have relied on were based on reports commissioned in a transparent manner from independent and qualified valuers.
The availability of such reports will help the taxpayer communicate their position to the Tax Office, establish the credibility of valuations, and reduce the risk of tax audits and adjustments.
The valuers of PP&E Valuations have extensive experience in undertaking market valuations for tax consolidation purposes across a wide range of industries. Many major corporations have relied upon PP&E Valuations to determine market values for tax consolidation purposes, whether it be due to organisational restructuring or after a merger or acquisition.
We are fully aware of the requirements of the ATO Guidelines and always tailor our service to afford our clients complete comfort against any audit in the most cost effective manner.
In addition to determining the appropriate market values, we are expert in allocating the market value to the underlying assets of the asset register in a manner which can be easily audited.
Resource Rent Taxes
The new resource tax arrangements relate to the commodities of iron ore, coal, oil and gas.
The ATO considers the following factors to be relevant in assessing the level of risk that a particular valuation may be inaccurate:
PP&E Valuations Pty Ltd (PP&E) is well positioned to assist companies in these matters.
Minerals Resource Rent Tax (MRRT)
The valuation of property, plant and equipment is critical to coal and iron ore miners successfully implementing and efficiently administering the MRRT.
The market value of property, plant and equipment may be required to determine both the Market Value Starting Base and the annual Taxable Revenue at the taxing point. Valuations may also be used when project interests are split or transferred between taxpayers.
Download a copy of our MRRT market valuation brochure.
Petroleum Resource Rent Tax (PRRT)
The PRRT regime was extended as of 1 July 2012 to cover all Australian oil and gas projects whether they are onshore or offshore.
Transitional provisions are provided for oil and gas projects moving into the PRRT, including a generous starting base using either market value or written down book values. Valuations may also be used when project interests are split or transferred between taxpayers.
Valuing the property, plant and equipment of a project interest is necessary as downstream physical assets may be valued for the purpose of working out the value of and interest in a petroleum project and to determine the value of the resource at the taxing point.
Click here for guidance on methods the ATO consider to be good practice for determining the market value of property, plant and equipment.
The ATO considers the following factors to be relevant in assessing the level of risk that a particular valuation may be inaccurate:
- the reliability of valuation data
- the appropriateness of the valuation method used
- the relative difficulty of the valuation
- the professionalism and competence of the valuer
- whether an open and transparent process to appoint the valuer was conducted, and
- the transparency of the valuation report.
PP&E Valuations Pty Ltd (PP&E) is well positioned to assist companies in these matters.
Minerals Resource Rent Tax (MRRT)
The valuation of property, plant and equipment is critical to coal and iron ore miners successfully implementing and efficiently administering the MRRT.
The market value of property, plant and equipment may be required to determine both the Market Value Starting Base and the annual Taxable Revenue at the taxing point. Valuations may also be used when project interests are split or transferred between taxpayers.
Download a copy of our MRRT market valuation brochure.
Petroleum Resource Rent Tax (PRRT)
The PRRT regime was extended as of 1 July 2012 to cover all Australian oil and gas projects whether they are onshore or offshore.
Transitional provisions are provided for oil and gas projects moving into the PRRT, including a generous starting base using either market value or written down book values. Valuations may also be used when project interests are split or transferred between taxpayers.
Valuing the property, plant and equipment of a project interest is necessary as downstream physical assets may be valued for the purpose of working out the value of and interest in a petroleum project and to determine the value of the resource at the taxing point.
Click here for guidance on methods the ATO consider to be good practice for determining the market value of property, plant and equipment.
Stamp Duty
Stamp Duty varies between the eight states and territories of Australia and not all types of assets are dutiable property in each jurisdiction.
We have acted on behalf of many individuals and companies in regards objections to the stamp duty assessments based upon the revenue office assessment of dutiable value. Issues may include the inappropriate inclusion of assets in the dutiable value, the incorrect application of ‘land rich’ provisions or simply a dispute as to the correct dutiable value of the assets.
We are experienced in working closely with legal advisers of our clients to provide the valuation facts on which they can build the legal case of successfully challenging stamp duty assessments.
We have acted on behalf of many individuals and companies in regards objections to the stamp duty assessments based upon the revenue office assessment of dutiable value. Issues may include the inappropriate inclusion of assets in the dutiable value, the incorrect application of ‘land rich’ provisions or simply a dispute as to the correct dutiable value of the assets.
We are experienced in working closely with legal advisers of our clients to provide the valuation facts on which they can build the legal case of successfully challenging stamp duty assessments.
Land Tax
Land Tax varies between the eight states and territories of Australia with differences including:
Simply contact us to arrange an independent valuation in relation to your tax matter.
- how the land value is calculated,
- the dates of valuation,
- the regularity of valuations,
- the time frame and process to lodge objections.
Simply contact us to arrange an independent valuation in relation to your tax matter.