Under Australia’s tax laws, taxpayers are frequently required to determine the market value of an asset or liability. The Inspector-General of Taxation found that there are “at least 206 different tax provisions that may require a taxpayer to determine an unrealised value of an asset or liability, or an alternative value to a realised asset or liability”.2
Examples of these provisions include:
- The market value substitution rule3 which can modify the capital proceeds or cost base in respect of a CGT event happening to a CGT asset where, for example, the parties were not dealing with each other at arm’s length.
- The first used to produce income rule4, where a taxpayer is deemed to have acquired their dwelling for its market value for the purposes of determining the extent of tax payable under the main residence exemption.
- The $6 million net market value asset test5, which can determine access to the small business CGT concessions where the taxpayer is not a small business entity.
- The “principal asset test”6, which can determine whether a membership interest in an entity is an indirect Australian real property interest and therefore taxable Australian property.
- The GST margin scheme, which may require the supplier to work out the GST payable by reference to the value of real property at a particular date.7
read more about it on https://taxandsupernewsroom.com.au/getting-market-value-right-taxation-purposes/
