Is a business valuation tax deductible?
The short answer
It depends on why you had it done. A valuation obtained for ordinary business purposes is generally deductible; one obtained in connection with acquiring or disposing of a capital asset is generally capital in nature and may instead form part of the cost base. Ask your accountant about your specific circumstances.
The purpose determines the treatment
Australian tax law generally looks at the character of the expense, not its label. A valuation obtained to support ongoing business decisions, insurance cover or financing of the existing business tends to be revenue in nature. One obtained because you are buying or selling a capital asset tends to be capital, and follows the asset rather than the year.
Capital does not mean wasted
Where a valuation cost is capital in nature, it commonly forms part of the cost base of the asset for CGT purposes, which reduces the eventual capital gain. It is not lost — it is deferred to the disposal. Your accountant will know which element of the cost base it belongs in.
Some costs have their own rules
Certain costs of establishing or restructuring a business, and certain professional fees connected with borrowing, have specific treatments in the tax law with their own timing. Whether a valuation fee falls within one of them depends on exactly what it was for and how the engagement was scoped.
Get the invoice narration right
Where a valuation serves more than one purpose — say, both a finance application and a shareholder transaction — the engagement scope and the invoice narration matter to your accountant’s analysis. It costs nothing to describe the purpose accurately at the outset, and it is difficult to reconstruct later.
The numbers
How treatment tends to follow purpose
General orientation only. This is a tax question, not a valuation question, and your accountant or tax adviser should confirm the treatment for your circumstances.
Scroll the table sideways →
| Why you had it done | Likely character | Where it usually goes |
|---|---|---|
| Insurance sums insured review | Revenue | Generally deductible in the year incurred |
| Bank finance for the existing business | Revenue or borrowing cost | Deductible, potentially over the loan term |
| Selling the business | Capital | Commonly a cost base or incidental disposal cost |
| Buying a business | Capital | Commonly part of the acquisition cost base |
| ATO market value substantiation for a CGT event | Capital | Typically follows the CGT event it supports |
| Family law proceedings | Usually private or capital | Rarely deductible; depends heavily on circumstances |
General information only and not tax advice. The Australian tax treatment of professional fees turns on the specific facts, and only your accountant or registered tax agent can advise on your position.
Caveats
What we can and cannot help with
We are valuers, not tax agents. That boundary is deliberate and it protects the usefulness of the report.
Who answered this
Prepared by the valuation team at Business Valuations Brisbane, the business valuation division of Asset Valuations Group. Every report we issue is signed by a Certified Practising Valuer of the Australian Valuers Institute. General information only — not advice on your specific circumstances.
- We describe the purpose accurately The engagement letter and the report state what the valuation was for, which is the document your accountant works from.
- We can invoice with a clear narration Where a valuation covers more than one purpose, tell us and the scope and invoice will reflect it rather than a generic description.
- We work alongside your accountant Most of our tax-related engagements are referred by accountants, and we are comfortable being instructed by them directly.
- We do not advise on deductibility Nor should any valuer. Ask your accountant or registered tax agent — the answer depends on facts we do not see.
Reviewed by a Certified Practising Valuer
Reviewed by Jarrad Khoury, Director and Head of Valuations — Registered Valuer (QLD, Not Limited), Licensed Valuer (WA, Not Limited), CPV and CBV. Published by Business Valuations Brisbane, the business valuation division of Asset Valuations Group.
Last reviewed
Scope the valuation properly, and the tax question gets easier.
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