Business Restructure and Rollover Valuations for Newcastle and Hunter Groups

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.

Indicative valuations from A$799. Certified Summary and Detailed reports from seven business days.

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.

A transfer inside the family is still priced at market value

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.

Book a Free Consultation

A certified valuer will listen to your situation and answer any questions you may have, at no cost.

Andrew Mackson
Andrew Mackson, CFA, ABV, CBV
Managing Partner · 15+ years
Book a Free Consultation →

Four rules that measure a restructure against market value

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.

CGT rollovers between related entities

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.

Transfer and landholder duty in NSW

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.

Division 7A

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.

The small business restructure rollover

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.

The restructures we value most often

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.

Putting a market value on every step

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.

Keeping every step consistent

Where restructure values fail years later

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.

Report Types and Pricing: Valuations From A$799

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.

Indicative Valuation
From A$799
Choose this if you are still comparing a restructure with other options and want a rough measure of what each path would mean for tax and duty before your advisers draft anything. Intended for internal decision-making; it is not a certified opinion for lenders, courts or the ATO.
Delivery: from seven business days after receipt of all information
Up to 50 pages
Internal audience
Can be used in litigation
Capital structure: common equity, bank/shareholder loans
Compliant with ATO market value guidance
APES 225 Valuation Engagement
Certified and signed by an experienced practitioner
Completed and reviewed by well trained staff
Considers and applies, when relevant, all 3 valuation approaches (income, market, asset)
Applies multiple cost of capital estimates (limited to 3)
Executive summary
Statement of limiting conditions
Valuation exhibits
Glossary
Table of contents
Company review
Industry review
Economic review
Discussion of valuation approaches and types of discounts
Discussion of the application of valuation approaches and discounts
Conclusion
Email support
Closing Zoom Call
Detailed Valuation
Contact for Pricing
Choose this when family branches, trust beneficiaries or minority holders may not agree, the structure is large or unusual, or a sale, an ATO review or proceedings in the Supreme Court of New South Wales are realistic and another expert will need to retrace every step. Certified and signed. Applies and reconciles all relevant approaches in full so another expert can follow the reasoning.
Delivery: from seven business days after receipt of all information
150+ pages
Internal and external audience, including for litigation or when likely to be reviewed by others
Can be used in litigation by a broad range of professionals
Capital structure: common equity, bank/shareholder loans
Compliant with ATO market value guidance
APES 225 Valuation Engagement
Certified and signed by an experienced practitioner
Completed and reviewed by well trained staff
Considers and applies, when relevant, all 3 valuation approaches (income, market, asset)
Applies multiple cost of capital estimates (full set of 12)
Executive summary
Statement of limiting conditions
Valuation exhibits
Glossary
Table of contents
Company review (full)
Industry review (full)
Economic review (full)
Discussion of valuation approaches and types of discounts (full)
Discussion of the application of valuation approaches and discounts (full)
Conclusion
Email support
Closing Zoom Call

See the full Services and Pricing page

Inside the report, and the valuer who answers for it

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.

Before anything is signed

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.

Restructure questions from Hunter owners and their advisers

Book value is a bookkeeping figure, and the rules that matter here ask a different question. Between related parties, the capital gains provisions generally deem a transfer to happen at market value, Revenue NSW is not limited to the price written into the documents, and each rollover sets its conditions in market value terms. A valuation dated to the transfer is the evidence that the right figures were used, and it is commonly the first document requested in an ATO review, a duty assessment or a buyer's due diligence.
A market value at the transfer date for each interest the rollover compares, all stated on one basis. The conditions vary and your tax adviser picks the rollover that fits: interposing a holding company over a group, for example, generally requires every owner to finish with the same share of market value they started with, while other rollovers weigh what one party hands over against what it receives. When the form of the interests changes, say from units to shares or between share classes, only a valuation can show whether the test is met.
Often it can, provided the conditions hold. Subdivision 328-G of the Income Tax Assessment Act 1997 is designed for owners of a small business entity who want to change the legal structure without changing who ultimately owns the business, for example moving a sole trader or family trust business into a company. Your adviser decides whether the restructure is genuine and whether ultimate economic ownership is maintained. What we add is a market value for each active asset at the transfer date, which shows the ownership position on both sides and becomes the record if the rollover is ever reviewed.
It could, and your lawyer should settle the question before any units or shares change hands. Under the Duties Act 1997 (NSW), Revenue NSW can charge landholder duty when an interest in a private company or unit trust that holds NSW land is acquired, and the assessment looks through to the value of the land the entity holds rather than the price paid for the interest. Land moved directly raises transfer duty questions of its own. We report the land and the business separately, and work with a registered property valuer where Revenue NSW is likely to want land evidence.
Usually, yes. A licence under the Liquor Act 2007 (NSW) does not simply follow the business into a new entity, so the change of owner has to be dealt with through Liquor & Gaming NSW, and for a hotel with gaming machines the entitlements held under the Gaming Machines Act 2001 (NSW) must move as well. Until the new entity holds both on the same terms, part of the value depends on that outcome. The premises lease matters too, because assignment follows the lease and, where it is a retail shop lease, the Retail Leases Act 1994 (NSW), and the remaining term and options shape what the business is worth. We record the licensing and lease position we relied on and, where an approval is pending, show the value under each outcome.
As separate assets, each with its own method, just as a buyer's accountants would treat them after an acquisition. Relief from royalty asks what the business would pay to license its trading name or technology if someone else owned it. Multi-period excess earnings isolates the profit that customer contracts generate after a fair charge for the other assets that help produce it, and in-house software is usually measured by what it would cost to rebuild. Passing any of these to a new entity at nil, when it clearly has value, is the most frequent restructure error we are asked to unwind.
Ideally while the step plan is still a draft, because a value known before signing can still change the steps. We ask for diagrams of the current and proposed structure, financial statements and management accounts for every entity up to the valuation date, the step plan from your adviser, and details of any land, leases, licences, brands, software or contracts on the move. Once everything is in hand, certified reports are delivered from seven business days. If you are still testing the idea, an Indicative valuation uses the same analysis and is intended for internal decision-making only.
Indicative valuations start from A$799 and are intended for internal decision-making, so they suit an owner who wants a well-reasoned range before committing to anything. Summary and Detailed reports are certified and are quoted after a free consultation, because the fee depends on the purpose, the number of entities, the state of the records and whether the opinion must withstand review by a court, the ATO or another expert. The fee is confirmed in the engagement letter before work starts, and every report is delivered from seven business days after we receive the information.

Book a Free Consultation

Talk your situation through with a certified valuer before you commit to anything, at no cost.

Andrew Mackson
Andrew Mackson, CFA, ABV, CBV
Managing Partner · 15+ years
Book a Free Consultation →

Related pages

Certified Valuation Reports From Seven Business Days

Every report is signed by a credentialed certified valuer and built to withstand ATO, ASIC, court and bank scrutiny.

Book a Consultation