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Business Valuation & Divorce

Business Valuation & Divorce

Typically, the words ‘business valuation’ make you think of something to do with stock markets. Indeed, when it comes to publicly listed companies, a business valuation is almost always a key component of any investor’s investment thesis.

Though, despite our strong tendency to associate business valuations with stock investing, there are a number of other instances in which business valuations are heavily relied upon. Selling a business, submitting an insurance claim, refinancing a business loan; valuations are essential to any of these.

Where a marriage comes to an unfortunate ending, and where at least one spouse owns a business - a business valuation will often be required.

Business valuation in the divorce process

 The division of property is a necessary, often complex process that needs to occur during a divorce. Commonly divvied up between the ex-spouses are assets such as the matrimonial home, motor vehicles, shares, bank accounts, investment property, furniture, and superannuation.

 When a business is involved in a divorce settlement, its value must be added to this collective asset pool. How come? Pursuant to the Family Law Act 1975, Australian courts categorise a business interest as ‘property’. This applies to all types of business interests, be they a partnership, sole trader, company, or trust structure.

 Unlike the above assets, however, valuing a business can be an onerous, resource-intensive task. In Australia, there are several business valuation methodologies that can be called upon. Their applicability is highly contextual, with the type of business structure and/or ownership position (i.e., controlling or non-controlling interest) typically guides the valuer’s decision-making process.


 Getting a business valued

 Initiating contact with accountants who are well-versed in business valuation—such as various senior managers and partners at Ashfords—is typically recommended to spouses who have decided to divorce.

 This recommendation holds regardless of whether the business(es) requiring a formal valuation is (are) shared between the two divorcees or wholly owned by one of them. Doing so together helps ensure that the settlement of shared property happens in a manner that is as fair and legitimate as possible.

 Marriage and de facto relationship break-ups are understandably some of the most stressful, taxing times in separating spouses’ lives—not to mention the lives of their family and friends. Unfortunately, when a divorce involves a business—particularly a small, family-run business—this process is often more painful. 

Seeking a professional business valuation helps alleviate some of this stress, and will streamline the settlement process by having a document that can be relied upon by both parties.


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What’s this new tax:

On 20 March 2024, the Victorian State Government introduced the Commercial and Industrial Property Tax Reform Bill 2024 ( The Bill is expected to become law and to take effect from 1 July 2024.

The Victorian Government, as announced in the 2023-24 Budget,  is progressively abolishing stamp duty on commercial and industrial property and replacing it with an annual tax.

The annual tax, to be known as the Commercial and Industrial Property Tax (CIPT), will be set at 1% of the property’s unimproved land value.

The tax will replace land transfer duty (stamp duty) that is currently payable on the improved value of the land when you purchase or acquire a commercial or industrial property in Victoria.

The new tax system will start to apply to commercial and industrial property if the property is transacted on or after 1 July 2024.


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