Restructuring valuations an opportunity for tax agents, valuer says

While the professional bodies said that workload for accountants will increase when the CGT changes come about on 1 July 2027, one valuation expert has said that valuers are not yet sure how much work will come during this time.

“We’re not yet seeing any uptick in that kind of work, because you don’t need to do that. Until at least 30 June 2027, and maybe never,” Valuation Ultimate chief executive and founder Trevor Monaghan (pictured) told Accounting Times.

“Family trusts are becoming less of a tax-effective vehicle,” Monaghan said.

“Where we’re seeing work at the moment is people trying to restructure before 30 June 2027 because they just don’t want to be in a family trust anymore, with family trusts going to be having a minimum 30 per cent tax rate. That’s now going to be double taxed in the company.”

“Email every client and just say, literally, ‘John, do you know what your business is worth?’ He will respond like ‘no’, ‘why’. So the next response to that is, ‘do you want to know if your business is worth it?’ And 100 per cent of the time John will say, ‘of course, why would I not want to know what my business is worth’.”

“People are waiting for people to ask to have their business valued. What ends up happening is that everybody wants a valuation [but] they might not all pay the price.”

For Monaghan, this presents an opportunity for accountants to earn more through valuation work through software after some training, pushing costs lower for clients compared to engaging a professional valuer.

He said that the current framework that valuers use for company valuations is earnings before interest, taxes, depreciation, and amortisation (EBITDA).

“It’s a very rough guide that in a lot of cases ends up being completely wrong and even misleading.”

“When you get into actually analysing businesses properly, really, is it making anywhere near what EBITDA says?”

“It’s a bit of a self-fulfilling prophecy if enough people use it, enough people believe it’s reliable enough, then everybody gets away with using it. Valuations are not a calculation; they’re a simulation.”