Shares in a private company or units in a trust? An independent market value from $1,495 + GST.

A share or unit is a piece of the equity, not a slice of the business. So we start with the value of the whole business, take off net debt (borrowings less any cash the business does not need) and add surplus assets the business does not use, such as investments. That gives the value of all the shares or units on issue. Only then do we value the holding itself, on its class, its rights and its size. The report shows each step with its figures.

A company can set the rights and restrictions attached to its shares (section 254B of the Corporations Act 2001), and some private companies and unit trusts have more than one class. Classes can differ in votes, in dividends or distributions, and in what they get on a winding up. Each class, and each holding, is valued on its own rights. A holding that controls the company is a different thing from a small parcel with no say over distributions, management or a sale, so the two can be worth different amounts per share in the same entity. Limits in the constitution, a shareholders' agreement or the trust deed, such as who the shares can be sold to, are part of what is valued, so we read them before we start. Unless a tax provision says otherwise, market value has its ordinary meaning, which the ATO's guide explains as the price a willing but not anxious buyer and seller, both fully informed, would agree. The guide sets no percentage for a minority holding or for control, so the report states the holding, its percentage and its rights, and explains how they are reflected in the value.

Where shares or units are given away, or sold to a related party at something other than market value, the tax law can look to market value instead. For CGT, section 116-30 of the Income Tax Assessment Act 1997 treats you as receiving the market value of an asset you give away, and where you sell to someone you did not deal with at arm's length for more or less than market value, it can substitute market value. On the other side, the receiver can start with a cost base equal to market value (section 112-20). Transfers to your own company, a family trust or a parent company are covered in more depth at Related-Party Transfer Valuation Melbourne. Your accountant decides how the rules apply, including any roll-over; we provide the value.

When a company buys back its own shares and they are not listed, the buy-back is an off-market purchase under Division 16K of the Income Tax Assessment Act 1936 (section 159GZZZK). For an unlisted company, the part of the price not debited to the share capital account is taken to be a dividend (section 159GZZZP). If the price is below the shares' market value, section 159GZZZQ treats the seller as receiving market value instead, subject to the rest of that section. That market value is worked out as if the buy-back did not happen and was never proposed; the ATO's practice statement PS LA 2007/9 explains that this keeps the buy-back itself out of the value. And where part of the price is a dividend and the price is above market value, the excess cannot be franked (section 202-45 of the Income Tax Assessment Act 1997). Either way the market value matters. We value the shares on that basis at the buy-back date; your accountant works out the tax.

When shares or units pass through a deceased estate, a capital gain or loss on death is generally disregarded (section 128-10). The value at the date of death can still matter: for shares or units acquired before 20 September 1985, a beneficiary's cost base starts at their market value on the day the person died (section 128-15). Estates have their own page: Estate and Succession Business Valuation Melbourne. Passing shares to the next generation during life is often a gift or related-party transfer, and the same market value rules can apply. When an owner leaves, the others or the company often buy the interest at a price the constitution, a shareholders' agreement or the trust deed may set. Buyouts between owners have their own page: Partner and Shareholder Buyout Valuation Melbourne.

Market value is fixed at a moment, so the date matters as much as the figure. For a gift or transfer it is the time of the CGT event, which your accountant confirms; for a buy-back, the time of the buy-back; for an estate, often the date of death. Where the date has passed, we value on what was known, or reasonably foreseeable, at that date, as the ATO's guide expects. Each past valuation date is +$495, agreed at engagement. We never value at a future date: the guide says a prospective assessment will not be considered reasonable or acceptable for tax.

We tell you exactly what is needed before you engage. For a share or unit valuation it is usually:

• Financial statements for the last three years, and year-to-date management accounts
• The share or unit register, showing the classes on issue
• The constitution and any shareholders' agreement, or the trust deed and any amending deeds
• Which holding is to be valued, and the date
• Any recent sales, issues or buy-backs of shares or units, with their prices
• Related-party loans and transactions
• Your accountant's note of what the value is for, if they are instructing us

In Victoria, a transfer of shares or units has not attracted duty since 1 July 2002 (Duties Act 2000 s 7(3A)). The exception that catches Melbourne family groups is landholder duty. It can apply when someone acquires a significant interest in a company or unit trust holding Victorian land worth $1 million or more: 50% of a private company, 20% of a private unit trust, or 90% of a listed company. The SRO expects the acquisition statement, and the duty, within 30 days. That duty is worked out on the land, not on the shares, so a property valuer values the land, and we value the shares or units and the rest of the entity. Whether duty applies, and how much, is for your lawyer, your accountant or the SRO.