Most business owners think about valuations only when they’re preparing to sell. But there are many situations where a formal business valuation isn’t optional, it’s a legal requirement.

Independent valuations help when restructuring, resolving disputes, or dealing with family law. They ensure financial decisions are fair, objective, and defensible.

At RJD Advisory, we regularly provide valuations for both commercial and legal purposes. Here’s a clear guide to when a valuation is required under Australian law and why independence matters.

1. Family Law and Divorce Settlements

In family law cases, business interests count as part of the property pool. This pool must be divided between the parties.

Under the Family Law Act, if one or both spouses own shares or interests in a business, the court usually needs a formal, independent valuation. This helps to determine the fair market value.

Common scenarios:

• One party operates a business within a family trust or company.

• Both parties are shareholders in a private company.

• A family business or investment structure forms part of the matrimonial assets.

The valuation must usually be conducted by a Single Expert Witness, appointed jointly by both parties or by court order. The valuer’s role is to remain impartial and provide an independent opinion to assist the court, not to advocate for either side.

Why it matters:

Disputes over business value can significantly delay settlements. A well-prepared independent valuation streamlines the process and helps avoid unnecessary legal costs.

2. Shareholder, Partnership, and Buy–Sell Disputes

When shareholders or partners separate, whether by choice or not, finding the fair value of ownership interests is crucial.

You may need a valuation when:

• A shareholder wishes to exit and sell their shares.

• A dispute arises over compensation or equity distribution.

• A shareholder agreement has a buy-sell clause. This clause activates if someone dies, becomes disabled, or leaves.

Most well-drafted shareholder or partnership agreements say that an independent expert must do the valuation. They use agreed principles, like fair market value, earnings multiple, or net asset basis.

Why it matters:

Relying on book value or an informal estimate can lead to significant inequities and, in some cases, litigation. A professional valuation protects all parties by ensuring transparency and fairness.

3. Restructuring, Mergers, and Acquisitions

When companies restructure, like during mergers, demergers, or transfers, the Australian Taxation Office (ATO) often needs an independent valuation. This helps ensure that transactions happen at arm’s length.

Situations include:

• Transferring business assets between entities (e.g., from a company to a trust).

• Issuing new shares or reorganising ownership structures.

• Implementing employee share schemes or introducing new investors.

An independent valuation shows that the transaction value is fair and reasonable. This helps lower the risk of ATO scrutiny or capital gains tax (CGT) disputes.

4. Taxation and CGT Purposes

Under Australian tax law, valuations are required in several situations, including:

• Capital Gains Tax (CGT): When you sell or transfer shares, units, or business assets, the ATO might need a valuation to check your gains or losses accurately.

• Small Business CGT Concessions: To access these concessions, you might need to show that your business or net assets meet certain thresholds.

• Related Party Transactions: When related parties sell or transfer assets, a valuation makes sure the price matches the market value. It should not be too low or too high.

Why it matters:

The ATO expects valuations to be prepared by qualified professionals using accepted methods. Unsupported or self-assessed values are often rejected during audits.

5. Financial Reporting and Compliance

Some companies, especially larger private and public ones, need valuations for financial reporting under Australian Accounting Standards (AASB).

Examples include:

• AASB 136 – Impairment testing of goodwill and intangible assets.

• AASB 13 – Measuring fair value for financial statements.

If your company has assets that might have changed in value, like goodwill from an acquisition, you may need periodic independent valuations to stay compliant.

6. Superannuation and SMSF Investments

If your Self-Managed Super Fund (SMSF) holds business assets, like shares in a private company or units in a trust, you must report those assets at market value in the fund’s annual accounts.

The Australian Taxation Office (ATO) needs trustees to use objective and reliable data to support valuations. For complex assets, that often means engaging a qualified independent valuer.

Typical examples:

• SMSFs holding private business shares

• Property or goodwill transfers into an SMSF

• Annual reporting for audit purposes

Accurate valuations help trustees meet compliance obligations and avoid penalties.

7. Estate and Succession Planning

When business interests pass through inheritance or succession, valuations help distribute assets fairly among beneficiaries.

Common uses:

• Establishing fair market value for estate tax or CGT purposes

• Setting up a buy–sell agreement between family members or partners

• Determining the value of business interests transferred into trusts

A professional valuation provides clarity for executors and family members. It lessens disputes and helps ensure fair outcomes.

8. Litigation, Insolvency, or Court Proceedings

Valuations often come up in various commercial disputes. These include insolvency cases, damages claims, and breach of contract issues. Courts depend on expert reports that follow the rules of evidence from the Federal Court or State Supreme Court.

RJD Advisory’s reports meet expert witness standards. This ensures our valuations hold up under legal scrutiny.

Key Takeaways

• A valuation isn’t just for selling a business — it’s often a legal necessity in family law, tax, and corporate matters.

• Courts, the ATO, and regulators expect valuations to be independent, well-documented, and defensible.

• Getting a qualified valuer on board early helps avoid expensive disputes. It also ensures compliance in different areas.

• Regular, proactive valuations also support strategic decisions — not just legal requirements.

How We Can Help

RJD Advisory offers independent business valuations. We assist with family law, shareholder disputes, restructuring, tax compliance, and expert witness assignments.

Our valuations are objective, transparent, and fully compliant with Australian professional and legal standards.

📞 Book a consultation today to explore how we can support your next step.

If you’re unsure whether your situation requires a valuation, contact RJD Advisory for a confidential discussion. We’ll guide you through what’s legally required — and what’s simply good business practice.