VALUATIONS – TAXATION

WHAT DOESENPRIS DO?

TAXATION

ENPRIS Pty Limited provides tax agent services in the following areas in the context of the application and administration of Australian taxation law:

• Valuation of businesses, securities, financial products, derivatives, intellectual property and intangible assets

• Taxation of financial products and arrangements

• Taxation compliance

FINANCE • Business Valuations

• Intellectual Property / Intangible Asset Valuations

• Financial Product & Derivatives Pricing

• M&A, Capital Raisings and Capital Management

STRATEGY

• Commercialisation

• Corporate Development

• Business & Strategic Planning2

Valuations for Taxation Purposes

• Valuation of businesses, securities, financial products, derivatives, intellectual property and intangible assets

• Advice in relation to:

– ATO’s Valuation practices and processes

– ATO’s Interpretative Advice (IA) function covering products such as class rulings, private rulings and market valuation rulings

– ATO’s active compliance products and functions including client risk reviews, consolidation reviews, specific issue audits and large business audits

– Transfer pricing, including the pricing of intragroup loans and guarantees, and the valuation of intellectual property and intangible assets

Taxation of Financial Products & Arrangements

• Valuation, pricing and characterisation of financial products, derivatives, structured products and financial arrangements

• Compliance assistance in relation to the application of Division 230 of the ITAA 1997

• Interpretation and technical application of Division 230 of the ITAA 1997

• Application and interpretation of international accounting standards and practices to taxation law

Taxation Compliance

• Communication of the commercial and business rationale for structures and transactions with the ATO, through the ATO’s cooperative compliance model

• Assistance in the preparation of responses to the ATO relating to informal notices, formal notices, compliance questionnaires and position papers

• Assistance in addressing Part IVA counterfactual arguments presented by the ATO

• Advice on the ATO’s compliance approaches and risk management strategies

ENPRIS – TAXATION SERVICES

3

CONSOLIDATIONS

CAPITAL GAINS AND LOSSES

COMPANY AND BUSINESS RESTRUCTURES

TRANSFER PRICING

MERGERS & ACQUISITIONS

CAPITAL MANAGEMENTSCHEMES

OFF-MARKET BUYBACKS

THIN CAPITALISATION

SMALL BUSINESS CONCESSIONS

IMPUTATION

EMPLOYEESHARE SCHEMES

SUPERANNUATION

FINANCIAL PRODUCTS,DERIVATIVES & FINANCIAL

ARRANGEMENTS

STRUCTURED PRODUCTS

ENPRIS can assist taxpayers and their advisers in meeting the ATO’s valuation requirements as reflected in the ATO’s Market valuation for tax purposes guide.

ENPRIS authored the ATO’s market valuation guidelines on business valuations; covering the valuation of businesses, securities, financial products, derivatives, intellectual property and intangible assets.

Assistance is provided across all areas of taxation law requiring valuations.

WHEN DO YOU NEED A

FOR TAX?

4

MERGERS & ACQUISITIONS

SMALL BUSINESS CONCESSIONS

ADVISE ON VALUATION REQUIREMENTS

QA EXISTING TAX VALUATIONS

PROVIDE VALUATIONS

NEGOTIATE WITH THE ATO

OBTAIN ADVICE AND SIGNOFF FROM THE ATO ON VALUATIONS

HOW ENPRIS CAN HELP – VALUATION ADVICE

5

HOW CAN HELP – ATO PROCESS

Compliance

• Pre-lodgement compliance reviews (PCR)

• Reportable tax positions (RTP)

• Risk reviews

• Specific issue audits

• Large business audits

• Annual Compliance Arrangements (ACA)

• Advanced Pricing Agreements (APA)

Interpretative Active

• Private rulings

• Market valuation rulings

• Commissioner’s discretions

New Law

• e.g. Transfer pricing, tax consolidation

Specific and General Anti-Avoidance Provisions

• Part IVA of the ITAA 1936

• e.g. 177EA of the ITAA 1936

Objections / Settlements

• e.g. Consolidations

• e.g. Identification, treatment and valuation of economic assets

Tax Policy

• e.g. Submissions to ATO or Treasury regarding valuation issues relating to existing or new law

6

WHEN DO YOU NEEDVALUATION ADVICE? –

EXAMPLES

Example 1: Off-Market Share BuybacksCompany A has excess franking credits that it wishes to pass to its shareholders. Company A proposes to enter into an off-market buyback with its shareholders. Company A is an unlisted company and is required to ascertain the market value of a share under Division 16K of the Income Tax Assessment Act (ITAA) 1936. Company A decides to seek a private ruling from the ATO.

Company A must consider a number of issues relating to market value:

a) Whether to seek a market valuation ruling

b) How to calculate the market value of the share for the purpose of the buyback

c) Whether a ruling can be sought on a prospective market valuation

d) Recent market valuation approaches accepted by the ATO

Example 2: Thin CapitalisationCompany B needs to recognise and value its intangible assets for the purposes of the application of Subdivision 820-G of the Income Tax Assessment Act 1997.

Company B must consider a number of valuation issues:

a) Application of sections 820-683 and 820-684 of the ITAA 1997

b) Recognition of internally generated intangibles under s820-683

c) Valuation of intangible assets under s820-684

d) Valuation guidance provided by the ATO

Example 3: Consolidation / CGTCompany C has purchased Company D, which joins Company C’s tax consolidated group. In order to establish the tax cost base of Company D’s assets, a market valuation of the assets is required.

Company C must consider a number of issues relating to market value:

a) The character of the assets on joining the tax consolidated group

b) The treatment of the assets under the tax consolidation legislation

c) The valuation of the assets on entry into the group

d) Market valuation guidance provided by the ATO

Example 4: Small Business ConcessionsCompany G’s owner wishes to access the small business CGT concessions available under Division 152 of the ITAA 1997. In order to access these concessions, Company G’s owner needs to satisfy the maximum net asset value threshold test of $6 million.

The Owner must consider a number of issues relating to market value:

a) What assets/liabilities are included for the purpose of the test

b) How to calculate the market value of the net assets

c) Market valuation guidance provided by the ATO

7

ENGAGING COMPANYENPRIS Pty LimitedLevel 25 Aurora Place88 Phillip StreetSydney NSW 2000Australia

ABN 89 099 880 547

MAILENPRIS Pty LimitedPO Box 20981World Square Sydney NSW 2002Australia

CONTACTMr Laine SimpsonPrincipal and DirectorMobile: 0412 304 802International: +61 412 304 802Email: laine@enpris.comwww.enpris.com

Version: Aug14