Why the valuation date matters more than most people expect
The valuation date matters because it fixes which set of facts the valuation is tested against — two valuations of the same business only months apart can produce materially different numbers once maintainable earnings shift, a comparable transaction multiple moves, a client is lost, or a new contract is signed. None of that is unusual; it is how businesses behave over time. What is unusual is how often the valuation date gets treated as a formality when it is actually doing most of the work. Before methodology is chosen, before add-backs are debated, the date has already constrained what evidence is even available to support a position. Get the date wrong — or fail to document why it was chosen — and the rest of the analysis is built on an unstable foundation.
Is the CGT valuation date the contract date or the settlement date?
For most business and share sales, the CGT valuation date is the contract date, not settlement — under CGT event A1 (ITAA 1997 s 104-10), the event happens when the contract for disposal is entered into, and where there is no contract, when the change of ownership occurs. This fixes the date market value is tested at wherever market value substitution applies under s 116-30 ITAA 1997 — for example, non-arm's-length transactions, or transfers for no consideration or below market value. A valuation prepared as at settlement date, when the operative date is actually the contract date, is valuing the wrong point in time — and if the business moved between the two dates, the conclusion may not support the position taken in the return.
What date applies for a deceased estate, restructure or trust CGT valuation?
In a number of common scenarios the valuation date is not a matter of choice — it is fixed by the event itself, and the job is to identify it correctly rather than select it. Death: for deceased estates, the relevant date is generally the date of death, since that is when the deemed disposal or cost-base reset under the CGT rules (ITAA 1997 Div 128) is tested. Restructure rollovers: same-entity or small business restructure rollovers under Subdiv 328-G, and other rollover provisions, generally require market value to be established at the time of the transaction giving rise to the rollover — typically the implementation or transfer date specified in the restructure documentation. Trust events: distributions of capital assets, trust resettlements, and vesting events are each tested at the date the relevant event occurs, which is a question of trust law and the trust deed as much as tax law. Division 7A payments and deemed dividends: where a private company transfers an asset to a shareholder or associate other than at market value, the market value relevant to the deemed dividend calculation under Division 7A ITAA 1936 is tested at the date of the transaction. In each of these cases, the first job is establishing the correct date from the underlying legal event — not from convenience, and not from when the valuation happens to be commissioned.
Can you choose your own CGT valuation date?
In most cases you cannot choose the CGT valuation date — it is fixed by the underlying legal event — but narrow latitude does exist in specific situations. Ongoing small business CGT concession eligibility testing (the $6m maximum net asset value test under Div 152 ITAA 1997) is generally tested just before the CGT event, which is fixed by the disposal — but where a taxpayer is assessing eligibility in advance of a planned transaction, a valuation at a recent date can inform planning even though the operative test date will be the actual event date. Voluntary restructures or share reorganisations not yet contracted allow the parties to choose an implementation date, and the valuation date follows that choice — meaning the decision about when to implement the restructure is, in substance, also a decision about which market conditions the valuation will be tested against. Buy-sell agreements and shareholder deeds sometimes specify valuation triggers (annual, on exit, on a triggering event) where the parties agreed the date mechanism in advance — the valuer's job is to apply the deed's mechanism, not to select a preferred date. Where genuine latitude exists, it should be exercised for commercial or structuring reasons, not to chase a lower or higher number: the ATO's market valuation guidance assesses the process behind a valuation as much as the conclusion, and a valuation date chosen because it produces a more favourable value, without an independent commercial reason for that date, is a weak position to defend if reviewed.
Which date counts if negotiation, signing and completion fall months apart?
Only one date is relevant for CGT event A1: the contract date. Business sale transactions typically move through negotiation, heads of agreement, contract signing and completion — and each stage can be weeks or months apart. Where the actual sale price was negotiated and agreed well before signing, and the business's financial performance shifted materially between negotiation and the contract date (a strong or weak trading quarter, loss of a major customer, a new contract won), the transaction price agreed at negotiation is not automatically the market value at the legally relevant date. This is the source of a common evidentiary gap: the parties have a commercial sale price, but that price reflects the business's position when the deal was struck, and the CGT event may be tested at a later date when circumstances had changed. Where the gap between negotiation and contract signing is short and nothing material happened, the sale price is usually strong evidence of market value at the contract date. Where the gap is long, or the business changed materially, the sale price needs to be tested against contemporaneous evidence as at the actual contract date, not simply assumed to still apply.
What evidence counts in a retrospective CGT valuation?
A retrospective valuation can only rely on information that was reasonably available at the valuation date — the point IVS 104 fixes as the reference date for market value, defined as the estimated amount an asset would exchange for between a willing buyer and a willing seller at that specific date. Once the correct date is identified and it falls in the past, the evidentiary discipline changes: financial statements, comparable transaction data, industry conditions and market multiples must be those observable at or before the date — not current data, and not information that only became known afterwards. This is not a technicality; it is the difference between a defensible position and hindsight bias. A valuer who knows the business went on to lose its largest client eighteen months after the valuation date cannot use that knowledge to justify a lower value at the date — the loss was not knowable at the time unless there was already visible risk (a contract nearing expiry, a customer in dispute) that a valuer at the date would reasonably have factored in. Equally, a valuer cannot use a subsequent uplift in trading to justify a higher retrospective value. The test is always: what would a reasonably informed party have known and assessed at that date, not what we now know happened next.
How should the valuation date be documented to survive review?
A defensible report documents four things about the valuation date, consistent with the process-over-conclusion standard set out in APES 225 and the ATO's Market Valuation Guidelines: the legal basis for the date selected (which provision or event fixes it, or the commercial reason for the date chosen where latitude existed); the source evidence for that date (contract execution date, board minutes, trust deed clause, death certificate, restructure implementation documentation); confirmation that the financial and market evidence used is contemporaneous with that date, not a later or earlier period; and, where the transaction price and the legally relevant date diverge, an explicit reconciliation explaining why the price still supports (or does not support) value at the correct date. Because the date so often drives the outcome, it is one of the first things a review will test — and one of the easiest things to get wrong if it is not addressed explicitly in the report. A report that states a valuation date without explaining why that date is the correct one, and without confirming the evidence used matches it, invites exactly the kind of question a review is designed to ask.
How Prismi confirms the valuation date before work begins
Prismi confirms the operative valuation date from the underlying legal event or transaction documents before any methodology work begins — not from the date the client made contact. Where the date is historical, the engagement is scoped and priced as retrospective (+$495 per historical date, reflecting the additional evidentiary work of sourcing contemporaneous documents), and the evidence base is built from information available at that date. Where a sale price exists but was negotiated materially earlier than the contract date, we test whether that price still reflects value at the correct date or whether an independent assessment is needed. None of this changes the number to suit a preferred outcome — it exists so that whichever number the evidence supports, the date it was tested at is unambiguous and defensible. Prismi is not a registered tax agent and does not provide tax advice — identifying and confirming which legal event fixes the CGT date for your specific position is a matter for your accountant or tax adviser; Prismi's role is to value the business as at the correct date once that position is settled.