Prove you are under the $6m net asset test with evidence that holds.

A maximum net asset value test valuation evidences that the net value of the CGT assets of a taxpayer, their connected entities and affiliates does not exceed $6 million just before a CGT event — the s 152-15 gateway to the small business CGT concessions. Prismi values every counted asset — goodwill, property, plant, loans — and documents the position so it is defensible if the ATO reviews the claim.

When you need to prove you are under the $6m net asset test

The small business CGT concessions in Division 152 ITAA 1997 can reduce or eliminate the capital gain on the sale of a business — but access runs through a basic condition. Taxpayers who do not qualify as a CGT small business entity on turnover must satisfy the maximum net asset value test in s 152-15: the total net value of the CGT assets of the taxpayer, entities connected with them, their affiliates and entities connected with those affiliates must not exceed $6 million just before the CGT event. The threshold is not indexed, so asset-price growth pulls more business owners near the line every year. Law firms recite the section and accountant blogs list the inclusions — the work that actually decides the claim is evidencing the market value of every counted asset at the right date. That is the engagement this page describes.

• ·Selling a business or commercial property where Division 152 concessions will be claimed
• ·Group net assets plausibly anywhere near $6 million once every entity is counted
• ·Pre-sale planning where the adviser needs to know the headroom before contracts are signed
• ·Restructures or rollovers where future concession eligibility must be preserved
• ·An ATO review or amended assessment questioning an earlier concession claim

What counts, what is excluded and what comes off the total

Section 152-20 defines the net value: the sum of the market values of the CGT assets, less the liabilities related to those assets, less certain provisions — annual leave, long service leave, unearned income and tax liabilities. For individuals, specific assets are excluded: assets held solely for personal use and enjoyment, superannuation and approved deposit fund rights, life insurance policies, and the main residence — except to the extent it has been used to produce assessable income, in which case a proportion of its market value comes back in. Shares or units in connected entities are disregarded to avoid double counting, because the connected entity's own net assets are counted directly. The mechanics are precise, and small classification errors move the total materially: a liability deducted that does not relate to a counted asset, or an exclusion claimed for an asset that does not qualify, can flip the result.

Connected entities and affiliates widen the net

The test is never limited to the entity making the capital gain. Under s 328-125, an entity is connected with you where one controls the other or both are controlled by the same third entity — control generally meaning the right to at least 40% of distributions of income or capital, or 40% of the voting power in a company, with specific rules for discretionary trusts. Under s 328-130, an affiliate is an individual or company that acts, or could reasonably be expected to act, in accordance with your directions or wishes, or in concert with you, in relation to their business affairs. Every connected entity's net CGT assets must be identified and valued at market value — the book values in a related company's balance sheet are not evidence. We map the group from the structure documents, value each counted entity, and record the reasoning for every inclusion and exclusion. Your accountant or lawyer confirms the legal application of the connection rules; we prepare the independent valuations they rely on.

Why 'just before the CGT event' controls the valuation

The test is applied at a single moment: just before the CGT event. The valuation date is fixed by the transaction, not chosen for convenience, and in most engagements it has already passed by the time the valuation is commissioned — which makes this retrospective work. The evidence standard follows the date: we rely on financial statements, appraisals, market data and management knowledge as they existed just before the event, not on hindsight. An arm's-length sale price agreed for the business itself is usually strong evidence of that asset's value, but it says nothing about the connected entities' property, loans or investments, which must each be evidenced independently at the same date. A valuation dated months after the event, built on post-event information, is one of the most common reasons MNAV positions fail at review.

Every asset valued the way the ATO expects

The ATO's 'Market valuation for tax purposes' guidance expects each material asset to be valued using an appropriate method with documented evidence — the basis of value being market value per IVS 104 and the willing-but-not-anxious principle in Spencer v Commonwealth. In an MNAV engagement that means goodwill valued on maintainable earnings with the multiple reasoned rather than asserted; plant and equipment at market value, because written-down book values routinely misstate what the assets would actually bring; real property supported by evidence current at the valuation date; and loans and receivables assessed for recoverability, since a related-party loan counts at what it is worth, not its face value. Where an asset is immaterial to the headroom, we say so and scale the work accordingly — the file should be thorough where the dollars are, not uniformly padded.

Near the $6m line: headroom, sensitivity and surviving review

Most of these engagements arrive because the client is close to the line and the tax at stake is large. A defensible file at the margin does three things. It concludes each asset at the most supportable position and states the resulting headroom explicitly. It runs sensitivity analysis showing how far the key assumptions — the goodwill multiple, the property value, receivable recoverability — would need to move before the total crossed $6 million. And it sets out worked positions either side of the line so your adviser can see exactly which assumptions carry the claim. The failure patterns at ATO review are consistent: goodwill omitted or taken at book value, a connected entity missed entirely, liabilities deducted that do not relate to counted assets, and valuation dates that drift from the event. Where the evidence shows the total exceeds $6 million, we say so — a report that manufactures eligibility fails precisely when the claim is tested.

Which tier fits

Because the tax at stake and the ATO review risk are both high, most maximum net asset value engagements warrant the Defensible Valuation File tier (from $8,995 + GST, 25–35 business days). A simple group with comfortable headroom may sit at the Comprehensive tier (from $3,995 + GST, 15–25 business days). Additional entities beyond the first are $750 each, and because the valuation date usually precedes the engagement, the retrospective surcharge of $495 per historical date commonly applies. Where the supportable range straddles the $6 million line, the Valuation Range & Scenario Review premium engagement is the right level — it is built for exactly this question. Fees are fixed at engagement and never contingent on the outcome.