Ask your Aspen advisor:
“If we ever sell part or all of the business, how do we make sure the valuation stacks up for tax and concession purposes?”
When a business is sold, the tax outcome often turns on one deceptively simple question: what was it actually worth?
The recent Kilgour case is a timely reminder that for tax purposes, value is not just about a neat spreadsheet or theoretical discount model. It is about the real commercial deal.
What happened
Three family trusts sold 100% of the shares in an online wagering business to News Corp for around $31 million. Two of those trusts held 20% each and wanted to access the small business CGT concessions. To do that, they argued their minority interests should be heavily discounted, because a smaller parcel is often worth less on its own.
The ATO disagreed, and so did the Court.
The Court said that because this was a coordinated sale of the entire business, the minority parcels were effectively sold as part of a 100% transaction. That meant the real market value of each parcel was tied to the whole deal, not some hypothetical standalone minority sale.
What this means in practice
There are two big lessons here.
1. Real-world facts beat theoretical models
Even if tax law asks you to test value at a particular point in time, the Court made it clear you cannot ignore what was commercially obvious at that point. If negotiations were well advanced and the buyer was clearly willing to pay a premium, that reality matters.
2. Minority discounts are not automatic
A lot of people assume a 20% or 30% holding should always be discounted because it lacks control. Kilgour shows that is not always true. If all owners are selling together and the buyer wants the whole business, each parcel may carry more value than a textbook minority model suggests.
Why business owners should care
This matters well beyond one court case. It affects:
- business sales
- succession planning
- restructures
- and access to CGT concessions
If you are counting on a valuation to keep you under a threshold, you need to make sure that valuation reflects the real commercial setting, not just a convenient assumption.
What to do before a sale
If a business sale or restructure is even on the horizon, good steps include:
- testing your eligibility for CGT concessions early
- documenting buyer motivations and deal context
- keeping records of negotiations and valuation evidence
- speaking to your advisors before contracts or heads of agreement lock things in
Final thought
Kilgour is a strong reminder that tax valuations work best when they reflect commercial reality.
If you are thinking about a sale, a succession event or a restructure, your Aspen advisor can help you sense-check the valuation position early, when there is still room to plan.
