This section contains a complete list of the IGT recommendations from the other chapters of the report for summary reference.

Recommendation 3.1

The IGT recommends that, in designing tax laws, the Government consider:

  1. requiring valuations only where the relevant regulation impact statement demonstrates that it would be of the 'highest net benefit'; and
  2. where valuation is required, provide safe harbours or allow the use of existing valuations obtained for other purposes such as accounting standards or as part of natural business systems.

Recommendation 3.2

The IGT recommends that the Government consider consulting with small businesses and their representatives with a view to reducing the reliance on valuations to access the small business CGT concessions.

Recommendation 3.3

The IGT recommends that, where eligibility criteria for tax concessions or benefits require valuation, the Government should consider the use of tapering to avoid disproportionate outcomes that may arise due to minor differences in valuations.

Recommendation 4.1

The IGT recommends that the ATO:

  1. continue consultation with stakeholders to develop and implement, where possible, administrative safe harbours that may reduce compliance costs associated with valuation; and
  2. develop and make publicly available a tool that provides an indication as to the eligibility of a taxpayer for the small business CGT concessions through the maximum net asset value test.

Recommendation 4.2

The IGT recommends that the ATO:

  1. continue to develop a strategy to identify the various valuation risks and the compliance action for mitigating those risks;
  2. where ATO compliance officers identify valuation risks:
    1. as a first step, use valuers to undertake a 'preliminary risk assessment' to assess such risk;
    2. agree or agree to disagree on relevant legal or factual issues; and
    3. consider whether further action, such as commissioning a critique or a full valuation, is required, taking into account factors such as the cost associated with each option as compared to the disputed amount; and
  3. where a taxpayer's assessment is to be amended as a result of a critique or full valuation, provide the relevant details contained in the preliminary risk assessment, critique and/or full valuation to that taxpayer.

Recommendation 4.3

The IGT recommends that the ATO:

  1. in consultation with stakeholders, develop a standard template for instructing valuers; and
  2. where a material valuation risk is identified during pre-lodgement processes, conduct a risk assessment of the taxpayer's valuation instructions with a view to reaching agreement on the instructions and/or to jointly instructing an independent valuer.

Recommendation 4.4

The IGT recommends that the ATO publish more detailed guidance on the application of penalties to valuation discrepancies.

Recommendation 4.5

The IGT recommends that the ATO use legal and valuation expertise, including external expertise, to:

  1. assist in areas such as identifying issues, gathering information and instructing valuers; and
  2. provide training to staff to build capability for the long term.

Recommendation 4.6

The IGT recommends that the ATO:

  1. allow taxpayer access to its instructions to valuers; and
  2. only use publically available information or information that can be disclosed to the taxpayer in arriving at its market valuation.

Recommendation 4.7

Where a valuation dispute is primarily due to the professional judgement of valuers engaged by each party, the IGT recommends that the ATO provide guidance to its staff on when they should accept the taxpayer's point estimate. Such guidance may provide a number of methods and when each may be appropriately used. Examples of these methods may include applying a 10 per cent tolerance to point estimates or obtaining an opinion from the ATO's valuer as to the reasonableness of the taxpayer's point estimate.

Recommendation 4.8

The IGT recommends that the ATO:

  1. promote the availability of Market Valuation Private Rulings (MVPR);
  2. jointly appoint valuers with taxpayers for MVPR purposes and allow the taxpayer greater access to the valuer; and
  3. consider bearing some of the valuation costs of MVPR to reflect potential ATO savings.

Recommendation 5.1

The IGT recommends that the ATO:

  1. ensure that it facilitates taxpayer requests for expert valuer conferencing on competing valuations to reach a common understanding of inputs and methodologies used by each valuer, the resulting valuation and the reasons for it;
  2. make taxpayers aware that they can request expert valuer conferencing as mentioned at (a) above; and
  3. in its guidance relating to valuations, update the range of dispute resolution approaches that may be used to include joint instruction of separate valuers, joint appointment of valuers and expert valuer conferencing.