- If you give an asset away, you are generally treated as receiving its market value at the time of the transfer.
- If you sell to family for more or less than market value and you are not dealing at arm's length, market value can be used instead of the price.
- The person receiving the shares or units usually starts their own cost base at market value too.
- A minority parcel is valued as a minority parcel, which is often less than its share of the whole business.
- Your accountant or tax adviser decides how the rules apply. We value the shares or units.
The rule in plain words
When you transfer shares or units to a family member, the tax law looks past the paperwork to what the asset was actually worth.
- If you give the shares away, you are generally treated as having received their market value at the time of the transfer.
- If you sell them to family at a family price, and you and the buyer were not dealing at arm's length, market value can replace the price you actually received.
The ATO calls this the market value substitution rule. "Arm's length" means each party acts independently and neither has influence or control over the other in the deal. Parents and children, siblings, and family trusts and their beneficiaries are often not at arm's length.
The practical result: the capital gain or loss is worked out using market value, whatever was written on the transfer form. Whether and how this applies to you is for your accountant or tax adviser.
The other side: the recipient's cost base
The same idea works for the person receiving the shares or units. In general, where someone acquires an asset without paying for it, or without dealing at arm's length with the previous owner, the first element of their cost base is the market value of the asset when they acquired it.
So one value usually does two jobs. It sets the giver's capital proceeds and the recipient's starting cost base. That is a good reason to get it right at the time, with a record both sides can keep for years.
Issuing new shares or units to a family member is different from transferring existing ones. The rules for new issues are not the same, and your adviser will tell you which apply.
What is being valued
A gift of shares is rarely a gift of the whole business. It is usually a parcel: 10%, 25%, half. A parcel is valued as what it is.
- Control or minority. A parcel that carries control is usually worth more per share than one that does not. A minority holder cannot set dividends, appoint the board or force a sale.
- Share classes and rights. Different classes may carry different voting, dividend or capital rights. The constitution or trust deed decides what each parcel is entitled to.
- Marketability. Shares in a private company are hard to sell. There is no market to list them on, and the constitution may limit who can buy.
- The underlying business. The value of the company or trust, its earnings, assets and debts, sits behind every parcel.
This is why a 20% parcel is often worth less than 20% of the whole business. It can also be why it is not. The answer depends on the rights attached and the evidence. We explain more on our private company shares page and our unit trust units page.
Timing and the 2027 changes
The value is needed at the date of the transfer. If the transfer happens on or after 1 July 2027, the changes to the CGT discount may also affect how the gain is worked out for an individual or trust. Your adviser will tell you whether a separate value at 30 June 2027 may be useful as well. More on our 30 June 2027 page.
What the valuation report covers for this purpose
For a gift or family transfer, the Professional Valuation Report sets out:
- the exact parcel valued: number and class of shares or units, and the entity
- the transfer date as the valuation date
- market value as the standard of value
- how the whole business was valued, and how that was applied to the parcel, including any control or minority considerations
- the rights in the constitution or trust deed that affect value
- evidence, assumptions and limitations, signed by the valuer responsible
The ATO decides for itself whether to accept a valuation. Its guidance says acceptability usually depends on the process followed rather than who conducted it, though some tax purposes require a particular type of valuer. Your adviser tells you if yours does.
What we need from you
- The share register or unit register, before and after the transfer
- The constitution, shareholders agreement or trust deed
- Financial statements and tax returns for the last three years
- Management accounts up to the transfer date
- The planned or actual transfer date and the parcel to be transferred
- Any price paid, and any loans between the family and the business
Get a fixed fee
Our fee is fixed by the annual revenue of the business, starting at $1,495 + GST for revenue under $1 million. Revenue of $10 million or more is a custom fixed-fee quote. Use the price tool below or start here.
General information only, current at 10 November 2026. We value businesses and business interests; we do not give tax advice. Your accountant or tax adviser decides whether a rule applies to you.