What is an ATO-aligned market valuation?
A plain-English definition of the ATO's market valuation expectations and what they mean for business owners and advisers.
An ATO-aligned market valuation is an independent business valuation prepared in accordance with the ATO's published market valuation guidance and International Valuation Standards (IVS 104). It is used for tax purposes — CGT events, restructures, related-party transfers, share buybacks, small business CGT concessions — where the ATO requires a substantiated market value. "ATO-aligned" does not mean "ATO-approved" — the ATO does not pre-approve valuations. Alignment means the methodology, evidence and reasoning are documented to the standard the ATO would review against if questioned.
What the ATO expects from a market valuation
The ATO's market valuation for tax purposes guidance sets out the expectations for tax-purpose valuations. In summary: the valuation must reflect market value (per IVS 104), the methodology must be appropriate for the asset and purpose, the evidence relied upon must be documented, the assumptions must be reasonable, and the report should be prepared by a person with the appropriate qualifications and independence. The guidance is principles-based rather than prescriptive — there is no checklist that guarantees acceptance.
Why "ATO-approved" is not a real thing
The ATO does not pre-approve valuations. There is no register of approved valuers, no certified template that confers acceptance, and no number that comes back from the ATO confirming a valuation is accepted before it is challenged. Any firm advertising "ATO-approved valuations" is overstating what is possible. What you actually want is a valuation that is supportable on its face — methodology, evidence and reasoning sufficient that a reviewer can see how the conclusion was reached.
What "aligned" means in practice
A valuation report prepared in accordance with the ATO's market valuation guidance will identify the purpose, the asset, the valuation date, the basis of value, the information relied upon, the methodology selected (with reasoning for selection and for rejection of other methodologies), the assumptions, the limitations, and the conclusion. Working papers supporting each input are retained. The report is signed by an accredited reviewer with named qualifications. Prismi reports meet this standard.
When the ATO reviews a valuation
ATO review of a tax-purpose valuation is not automatic — most valuations are not reviewed individually. Where review occurs, it is typically in the context of a broader audit, a small business CGT concession claim, a restructure rollover claim, or a related-party transaction. When a valuation is reviewed, the ATO assesses whether the methodology is appropriate, whether the evidence is documented, whether the assumptions are reasonable, and whether the conclusion is supportable.
Common questions.
Is "ATO-aligned" a legal term?+
No. It is a practical descriptor used in the valuation industry to mean a valuation prepared in accordance with the ATO's market valuation guidance and to a standard suitable for tax-purpose use. The legal standard is whether the valuation is "reasonable" and "supportable" if reviewed.
Does using a CA or CPA make a valuation ATO-aligned?+
Not by itself. The professional qualification supports independence and competence, but the alignment comes from the methodology, evidence and documentation in the report. A CA-prepared valuation can be unsupportable; a properly-prepared valuation by an accredited business valuer can be highly supportable.