Tax probe on asset worth
The Tax Office is to face an inquiry into its system of valuing assets for tax purposes.
All sorts of assets including land and property, plant and equipment and intangibles, such as intellectual property and rights, have to be priced at "market value" for capital gains and other tax purposes.
The Inspector-General of Taxation, Ali Noroozi, has launched the inquiry after receiving complaints from small business owners about the way the Tax Office handles the requirement.
"The main source of concern is the compliance burden," he told BusinessDay. "But the other problem is there is no definition of market value. What one valuer decides might be quite different to what another valuer decides.
"Taxpayers have to self assess, they have to determine what the market value is. But some time down the track the Tax Office might audit them. For example, the taxpayer might say a table is worth a million dollars. Later the office might say it's only worth $5. That's a bizarre example, but the risk is that even bringing in an outside valuer may not provide protection.
"While market value is a great economic concept, on a practical level it causes lots of difficulties."
He has asked for submissions by December 20.