The Inspector-General of Taxation (IGT), Mr Ali Noroozi, today announced terms of reference for his review into the Australian Taxation Office’s (ATO) administration of valuation matters and called for stakeholder submissions.

“Australia’s tax and superannuation laws are increasingly relying on concepts such as market value,” Mr Noroozi said. “Whilst there may be sound economic reasons for using such concepts, their use has resulted in a growing need for taxpayers to undertake significant valuation work,” he said. Valuations are required in numerous taxing regimes and affect a wide range of taxpayers — from small businesses seeking the capital gains tax concession to larger businesses complying with the income tax consolidation or taxation of financial arrangements regimes. Valuations may be required for a variety of assets, transactions, businesses and liabilities amongst others. Assets may be tangible, such as land and property, plant and equipment, or intangible, such as intellectual property and rights. Depending on the circumstances, taxpayers may perform their own valuation or engage the services of a professional valuer.

“The main source of taxpayer concern is the compliance burden that valuations necessitate,” Mr Noroozi said. “Critically, valuations are inherently subjective and can be a source of significant uncertainty leading to ATO disputes which can be frustrating, time-consuming and costly,” he said. When verifying the appropriateness of taxpayer valuations, the ATO may seek input from their own professional valuers. These valuers may be from the private sector or they may be officers of the Australian Valuation Office (AVO). The AVO is a business line within the ATO that provides fee-based services to the public sector.

“Stakeholders have also raised concerns with the independence, capability and the ATO’s engagement of the AVO and private sector valuers,” he said. “I welcome your submission to this review. My aim is for balanced thinking and better outcomes for taxpayers and the ATO’s administration of the system,” said Mr Noroozi.

Terms of reference and submission guidelines for the review are available on the IGT website. Submissions will be treated as confidential and are due by 20 December 2013.

SYDNEY 19 November 2013

Media contact: Ali Noroozi – (02) 8239 2107