The business valuation referral guide for accountants.

Accountants refer clients for a formal business valuation when a tax or transaction event fixes a consequence to market value — small business CGT concessions, restructures, Division 7A transactions, buy-sell events, estates and employee share schemes. APES 225 makes valuing your own client structurally problematic. Prismi provides independent, evidence-led valuations built for accountant referral, with fixed fees quoted at engagement, defined turnaround times and a standard briefing pack.

When a client event needs a formal valuation — and when it doesn't

Most compliance work never needs a valuation. The trigger is a client event where tax law or a binding document fixes a consequence to market value: a small business CGT concession claim where the eligibility tests turn on market values (Div 152 ITAA 1997), a restructure rollover (Subdiv 328-G), a non-arm's-length transfer where market value substitution applies (s 116-30), a Division 7A transaction, a buy-sell event under a shareholders' agreement, a deceased estate, or an employee share scheme issue. In each case, the number that goes into the return, the deed or the minutes needs documented evidence behind it. An accountant's estimate or an industry rule of thumb is precisely the kind of position that does not hold up if the ATO asks how the value was reached — the ATO's market valuation guidance expects methodology, evidence and reasoning, not a multiple noted on the workpaper. The standard is market value in the Spencer sense: what a willing but not anxious buyer would pay a willing but not anxious seller.

The trigger table: client events that require an independent valuation

• ·Small business CGT concessions (Div 152 ITAA 1997) — the maximum net asset value test (s 152-15) and the active asset test (s 152-35) both depend on market values; the concession claim is only as strong as the valuation evidence behind it
• ·Restructures and rollovers (Subdiv 328-G) — the small business restructure rollover requires market-value evidence at the transfer date to support the position taken
• ·Related-party and non-arm's-length transfers — s 116-30 substitutes market value for actual proceeds, so the value in the transfer documents needs independent support
• ·Division 7A (ITAA 1936) — transfers of assets from a private company to shareholders or their associates are treated as payments at market value; an unsupported value creates deemed dividend exposure
• ·Buy-sell and shareholder exit events — shareholders' agreements, insurance funding reviews and exiting-partner buyouts all need a value both sides can rely on
• ·Deceased estates and succession — date-of-death and historical acquisition values, frequently retrospective, where the estate and the beneficiaries need an independent number
• ·Employee share schemes (ESS) — the market value of shares or options, at grant and at any deferred taxing point, drives the employee's tax position and the scheme documentation

Why valuing your own client puts your firm at risk

APES 225 Valuation Services applies whenever a member in public practice provides a valuation service, and it requires objectivity and professional competence. The problem with valuing your own client is structural, not personal. The firm that prepared the financial statements is now opining on a value derived from them — a self-review threat. The firm that lodges the return benefits professionally from the concession being available — an advocacy threat. And if the ATO reviews the claim, the first question asked of a valuation prepared by the tax agent who lodged the return is the independence of the valuer. Referring the valuation out resolves all three at once: the accountant keeps the tax application, the independent valuer signs the value with an independence statement, and the file shows a clean separation between the person who determined the value and the person who used it.

The standard briefing pack: what to send with a referral

A referral is faster and cheaper for the client when the brief is complete. The pack below is what we need to quote a fixed fee and start the engagement without back-and-forth — most of it already sits in your working papers.

• ·The purpose and provision — Div 152 concession claim, Subdiv 328-G rollover, Div 7A transfer, buy-sell, estate or ESS — because purpose drives methodology and report scope
• ·The valuation date or dates, including whether any date is retrospective
• ·Entity structure — ASIC extract or trust deed, shareholder or unit-holder register, group structure diagram where applicable
• ·Financial statements for the last 3–5 years plus current year-to-date management accounts
• ·The proposed transaction terms and any related-party transactions on foot
• ·The add-back schedule with supporting evidence, where one exists
• ·The deadline that matters — lodgement date, deed execution date, probate timeline
• ·The contact protocol — whether the client deals with us directly or everything runs through your office

Fixed fees and turnaround times you can quote in the client meeting

Fees are fixed at engagement and are never contingent on the outcome — the quote you pass on in the client meeting is the fee. Turnaround runs from the document completeness check, not from first contact.

• ·Essential — from $1,495 + GST, delivered in 10–14 business days
• ·Comprehensive — from $3,995 + GST, delivered in 15–25 business days
• ·Defensible Valuation File — from $8,995 + GST, delivered in 25–35 business days
• ·Valuation Range & Scenario Review — premium engagement, scoped and quoted on enquiry
• ·Retrospective valuations — +$495 per historical valuation date; additional entities $750 each; rush delivery +30% of the base fee, subject to capacity

Which tier to recommend for which matter

Essential suits straightforward single-entity matters where a concise, supportable value is needed — a simple Division 7A asset transfer, an internal buy-sell funding review. Comprehensive is the default recommendation for Div 152 concession claims, Subdiv 328-G restructures and live buy-sell events: multiple methodologies tested, a supportable range identified, and the concluded position reasoned in the report. The Defensible Valuation File is for matters where review or dispute is a realistic prospect — high-value concession claims, contested estates, positions the ATO is likely to examine — and includes the full working-file build designed to be handed over if questions come. The Valuation Range & Scenario Review suits clients planning ahead of a transaction rather than reporting one. Estates and other historical dates attract the retrospective surcharge; group structures are quoted per additional entity.

How the referral runs in practice — including co-branding

Send the briefing pack; we run a conflict check and return a fixed-fee quote. The engagement letter can go to the client or to your firm, and you choose the contact protocol — many referring accountants remain the sole client contact from start to finish. Draft reports go to you first for a factual-accuracy review; the conclusion itself is not negotiable, because the methodology and evidence determine the position, and if a client wants a target number we will say so and decline the engagement on those terms. On presentation: the report can be co-branded for delivery through your firm, or delivered entirely within your client relationship, but the signature, the independence statement and responsibility for the conclusion always remain Prismi's — that separation is what makes the referral worth making. Every report is senior-reviewer signed and the full working file is retained. We prepare independent valuations only: no tax agent services, no compliance work, no advice on applying the concessions, and no interest in your client beyond the valuation engagement. The tax and legal application stays with you.