Private ruling: Capital gains tax - shares
Date of advice: 19 May 2026
Published: 20 July 2026
Ruling period: Year ending 30 June YYYY
Date scheme commenced: DD MM YYYY

Ruling: Q1: Are the capital proceeds from CGT event A1 happening to the shares for $X equal to the total consideration the ABC Family Trust (ABC FT) received from you on transfer? | A1: Yes. The Commissioner has not fully vetted whether the $X or the valuations performed represents 'true market value' of the shares at the time the event A1 occurred. Any subsequent discovery of the valuations and application does not represent 'true market value', will invalidate the assumption and therefore application as outlined. | Q2: Did the sale of the shares in Company A Pty Ltd (Company A) by The ABC Family Trust (ABC FT), give rise to a discount capital gain under Division 115 of the Income Tax Assessment Act 1997(ITAA 1997)? | A2: Yes. | Q3: Is the first element of the cost base of the shares in Company A Pty Ltd (Company A) purchased by you, money paid for them in in accordance with section 110-25(2) of the Income Tax Assessment Act 1997 (ITAA 1997)? | A3: Yes. The Commissioner has not fully vetted whether the $X paid or the valuations performed represents 'true market value' of the shares. Any subsequent discovery of the valuations and application does not represent 'true market value', will invalidate the assumption and therefore application as outlined. | Q4: Did a CGT event I1 under section 104-160 of the Income Tax Assessment Act 1997 (ITAA 1997) apply to you, the time you ceased being an Australian resident, resulting in a deemed disposal of your assets at estimated market value? | A4: Yes. | Q5: Was the market value of your assets at the date of departure from Australia for the purpose of applying section 104-160 of the Income Tax Assessment Act 1997(ITAA 1997), such that the capital gain calculated pursuant to section 104-160(4) Income Tax Assessment Act 1997 (ITAA 1997) is nil? | A5: Yes. The Commissioner has not fully vetted whether the $X paid or the valuations performed represents 'true market value' of the shares. Any subsequent discovery of the valuations and application does not represent 'true market value', will invalidate the assumption and therefore application as outlined.

Relevant facts and circumstances: Company A Co (Company A) is a privately-owned Australian proprietary company and an Australian tax resident. Company A operates a business-to-business technology platform provider in the technology industry sector. It currently operates in Australia and in Country Z. Company A is the holding company of the following wholly owned subsidiaries (collectively the Group): • Company A Co; • Company A Technology Co, and • Company AB Co, LLC. Company A is a platform and service provider to the Australian technology industry. All contracts relating to the Australian business are with this entity. Company A Technology Pty Ltd is a platform service provider to Country Z technology industry, with X client in operation (since MM 20YY). All contracts relating to Country Z business will be with this entity going forward. Company AB Co, LLC is a Country Z incorporated entity that does not presently have any activities. Company A and its wholly owned subsidiaries are not consolidated for income tax purposes. The ABC Family Trust (ABC FT) is a discretionary family trust and an Australian tax resident. The following documents provided with respect to the application for private ruling, form part of, and are to be read with, the description of the facts and circumstances set out below: • List of documents supplied Pursuant to the powers under ABC FT Trust Deed, ABC FT was amended on DD MM 20YY. You are the Appointer and Designated Beneficiary of ABC FT. Up until DD MM 20YY, ABC FT held XXX,XXX ordinary shares in Company ABC (the Shares). ZZZ Co (Trustee) is the Trustee of ABC FT. You were the sole director and shareholder of the Trustee up until DD MM 20YY. On DD MM 20YY, you: • Transferred the shares held in the Trustee to Person B, and • Resigned as the sole director of the Trustee. Person B was appointed as the sole director of the Trustee. The only asset held by ABC FT since establishment was the shares. It has no carried forward tax losses. The history of the Shares held by ABC FT is as follows: • The Shares were originally acquired on DD MM 20YY, and the initial issue was XXX shares at a total value of $X.XX. • On DD MM 20YY, these shares were split at a ratio of X:XXX resulting in ABC FT holding XXX,XXX shares. • On DD MM 20YY, ABC FT disposed of XX,XXX shares (leaving XXX,XXX shares owned by ABC FT). • On DD MM 20YY, ABC FT purchased XX,000 shares for $X. • On DD MM 20YY, ABC FT sold the Shares to you for $X. The shares were acquired by ABC FT with the intention to hold the Shares for the long-term to generate income (dividends) and long-term growth. You recently obtained X independent valuations of the Group, and consequently the shares, from X valuation firms. The first valuation was performed by Valuation Firm AAA and the second was performed by Valuation Firm BBB. The valuations per these independent valuation reports issued are as follows: • Valuation Firm AAA: $X to $X and • Valuation Firm BBB:$X to $X. You were issued XXX,XXX Shares in Company A personally under a long-term incentive plan (Personal Shares). You are subject to income tax on the market value of these shares at grant, which will be included in their income tax return for the year ended 30 June 20XX. The market value of the Personal Shares then became the cost base of these shares. On DD MM 20YY, you ceased Australian tax residency and relocated to the Country Z permanently. Prior to the you ceasing Australian tax residency, the following steps occurred in sequential order on DD MM 20YY (the Transaction): • ABC FT sold the shares to you for $X which represents the middle of the range of the market valuations based on the X independent valuations. ABC FT realised a capital gain of $X from the sale of the shares. • Under the Share Sale Agreement, the consideration for the purchase of the shares was a debit to the loan account of ABC FT, such that there was a loan receivable from you to ABC FT of $X. • ABC FT resolved to distribute its income, including the capital gain, to you. • The Trustee entered into a set-off agreement with you to confirm that the amount of $X owed by you to ABC FT was satisfied by offsetting the amounts owed by ABC FT to you including as a result of the unpaid present entitlement arising from the distribution. • The Trustee vested ABC FT. At the time immediately prior to ceasing Australian tax residency, your assets (Assets) were: • The shares; and • The personal shares. Assumption The independent professional market valuations undertaken have not been fully vetted to see if they represent true market valuation of the shares in Company A at the time of disposal and transfer.

Relevant legislative provisions: Income tax Assessment Act 1997 subsection 102-5(1) | Income tax Assessment Act 1997 subsection 102-20(1) | Income tax Assessment Act 1997 Division 104 | Income tax Assessment Act 1997 section 104-10 | Income tax Assessment Act 1997 section 104-160 | Income tax Assessment Act 1997 section 104-165(2) | Income tax Assessment Act 1997 subsection 108-5(1) | Income tax Assessment Act 1997 section 110-25(2) | Income tax Assessment Act 1997 section 112-20 | Income tax Assessment Act 1997 Division 115-A | Income tax Assessment Act 1997 section 115-5 | Income tax Assessment Act 1997 section 115-10 | Income tax Assessment Act 1997 section 115-15 | Income tax Assessment Act 1997 section 115-20 | Income tax Assessment Act 1997 section 115-25 | Income tax Assessment Act 1997 section 115-225 | Income tax Assessment Act 1997 section 115-228 | Income tax Assessment Act 1997 subsection 116-20(1) | Income tax Assessment Act 1997 subsection 116-30 | Income tax Assessment Act 1997 section 118-20 | Income tax Assessment Act 1997 section 855-15 | Income tax Assessment Act 1997 subsection 995-1(1)

Reasons for decision: Summary: Section 104-10(1) of the ITAA 1997 provides that CGT event A1 occurs on disposal of a CGT asset. Therefore, the sale of the shares from the ABC Family Trust (ABC FT) to you constituted the disposal of a CGT asset, triggering CGT event A1. | Detailed Reasoning - Detailed reasoning: Section 102-20 of the ITAA 1997 states that a capital gain or capital loss is made only if a capital gains tax (CGT) event happens to a CGT asset. A CGT asset is defined in section 108-5(1) of the ITAA 1997 as any kind of property, or a legal or equitable right that is not property. Shares in a company and units in a unit trust is a CGT asset under section 108-5 of the ITAA 1997. The shares held by ABC FT constituted CGT assets, consistent with the examples listed in section 108-5 of the ITAA 1997. Section 104-10 of ITAA 1997 explains that this event occurs whenever there is a change of ownership for a CGT asset, for example, when you dispose of shares in a company. Subsection 104-10(3) of the ITAA 1997 provides that you dispose of a CGT asset when you either enter into a contract for its disposal, or where no contract exists, when the change of ownership occurs. Section 104-10(1) of the ITAA 1997 provides that CGT event A1 occurs on disposal of a CGT asset. Therefore, the sale of the shares from the ABC Family Trust (ABC FT) to you constituted the disposal of a CGT asset, triggering CGT event A1. | Detailed Reasoning - Consequences of CGT event A1: The timing of CGT event A1 is governed by section 104-10(3) of ITAA 1997, which states the event time is when you enter the contract for disposal or, if no contract exists, when the change of ownership occurs. Section 104-10(4) of the ITAA 1997, further explains that you make a capital gain if the capital proceeds exceed the cost base of the asset or incurs a capital loss if the capital proceeds are less than the asset's reduced cost base. | Detailed Reasoning - Capital proceeds: Section 116-20(1) of the ITAA 1997 provides that the capital proceeds from a CGT event are the total of: (a) the money you have received, or are entitled to receive, in respect of the event happening; and (b) the market value of any other property you have received, or are entitled to receive, in respect of the event happening (worked out as at the time of the event). | Detailed Reasoning - Market value substitution: Section 116-30 of the ITAA 1997 provides that capital proceeds are substituted by the market value where, amongst other things, the capital proceeds received from a CGT event cannot be valued or the capital proceeds are more or less than market value. As the capital proceeds received by ABC FT represent the market value of the shares, section 116-30 does not apply to substitute a different value to replace the proceeds paid by you. | Detailed Reasoning - Conclusion: The ABC FT sold the shares to you for market value consideration based on the X independent professional valuations commissioned by you close to the actual transfer in XXX 20XX. The capital proceeds for CGT event A1 in accordance with section 116-20(1) of the ITAA 1997 is the consideration received by the ABC FTfrom you, being $X. This amount is equal to the market value estimate of the shares close to the time the contract for the sale of the shares is entered into with you. Section 116-30 does not apply to substitute a different value to replace the proceeds paid by you. | Summary: Division 115 of the ITAA 1997 provides for the general CGT discount which allows you to reduce your capital gain by 50%. Section 115-215 of the ITAA 1997 ensures that the appropriate amounts of the trust estate's net income attributable to the trust estate's capital gains are treated as a beneficiary's capital gains when assessing the beneficiary, so: a) the beneficiary can apply capital losses against gains; and b) the beneficiary can apply the appropriate discount percentage (if any) to gains. The capital gain arising from the disposal of the shares by the ABC FT qualified as a discount capital gain, and the applicable CGT discount of 50% applies in calculating the net capital gain for ABC FT. You were made specifically entitled (for the purposes of section 115-228 of the ITAA 1997) to the entire amount of capital gain made by the ABC FT from CGT event A1 while you were an Australian resident. The ABC FT was vested and terminated soon after this time. You may be entitled to a 50% CGT discount under Division 115 of the ITAA 1997 in calculating the net capital gain. | Detailed Reasoning - Detailed reasoning: Division 115 of the ITAA 1997 provides for the general CGT discount which allows you to reduce your capital gain by 50%. Subdivision 115-A of the ITAA 1997 provides the general CGT discount can be applied to a capital gain that meets the requirements of section 115-10 of the ITAA 1997, section 115-15 of the ITAA 1997, section 115-20 of the ITAA 1997 and section 115-25 of the ITAA 1997. You can apply the general CGT discount if the following requirements are satisfied: • you are an individual, a trust or a complying superannuation entity, • a capital gains tax (CGT) event happens to an asset you own, • the CGT event happened after 11.45am (by legal time in the Australian Capital Territory) on 21 September 1999, • you acquired the asset at least 12 months before the CGT event, and • you did not choose to use the indexation method. Under the general CGT discount, you reduce your capital gain by the discount percentage. Section 115-100 of the ITAA 1997 provides the discount percentage for trusts is 50%. The capital gains tax streaming provisions in Subdivision 115-C of the ITAA 1997 (which operate in respect of the 2010-11 and later income years following substantial amendments made to the Subdivision) ensure, among other things, that a beneficiary of a trust who is made 'specifically entitled' to a capital gain made by the trustee will be assessed on it, rather than the gain being assessed proportionately to the beneficiaries entitled to trust income. Section 115-215 of the ITAA 1997 ensures that the appropriate amounts of the trust estate's net income attributable to the trust estate's capital gains are treated as a beneficiary's capital gains when assessing the beneficiary, so: a) the beneficiary can apply capital losses against gains; and b) the beneficiary can apply the appropriate discount percentage (if any) to gains. Section 115-228 of the ITAA 1997 sets out when a beneficiary will be regarded as specifically entitled to a trust capital gain (either in whole or in part). To be specifically entitled to the whole gain, the following requirements have to be met: • the beneficiary must have received, or can reasonably expect to receive, in accordance with the terms of the trust, all of the financial benefit referable to the capital gain (paragraphs (a) and (b) of the definition of 'share of net financial benefit' in subsection 115-228(1) of the ITAA 1997). • the financial benefit must be recorded, again in accordance with the terms of the trust, in the accounts or records of the trust in its character as referable to the capital gain (paragraph (c) of the definition). In respect to the above, ATO ID 2013/33 states that where a trustee of a trust makes a capital gain by reason of CGT event E5, the beneficiary can be specifically entitled to the gain if the above requirements are met. As to the first requirement, the ATO ID explains that the Explanatory Memorandum to the Bill that on enactment introduced section 115-228 of the ITAA 1997 stated: 2.59 [W]hether a beneficiary can be specifically entitled to a capital gain or franked distribution is a question of fact. For example, when a beneficiary becomes absolutely entitled to a trust asset, it may be reasonable to expect the beneficiary will receive the net financial benefit referable to the deemed (trust) capital gain from CGT event E5. As to the second requirement, the Explanatory Memorandum stated: 2.63 The accounts or records of the trust would include the trust deed itself, statements of resolution or distribution statements, including schedules or notes attached to, or intended to be read with them. However, a record merely for tax purposes is not sufficient. ATO ID 2002/964 - Income Tax - Capital gains tax: trusts: calculation of beneficiary's net capital gain, states: A beneficiary who is not under a legal disability and who is presently entitled to a share of the income of a trust must include in their assessable income their share of the net income of the trust estate (section 97 of the ITAA 1936). Subdivision 115-C of the ITAA 1997 sets out rules that affect the calculation of a beneficiary's net capital gain if the beneficiary is assessed on a share of the net income of the trust which includes a capital gain. Section 115-215 of the ITAA 1997 treats a beneficiary as having capital gains in addition to those they have from a CGT event happening. For each part of a trust capital gain that was reduced by the CGT discount and which is included in the beneficiary's income under section 97 of the ITAA 1936, the beneficiary is treated as having made a capital gain equal to twice that amount (paragraph 115-215(3)(b) of the ITAA 1997). The result obtained following the application of section 115-225 of the ITAA 1997 is then doubled if the trustee applied the 50% CGT discount in working out its own net capital gain (subsection 115-215(3) of the ITAA 1997). The amount is treated as a capital gain of the beneficiary which is then taken into account (along with the beneficiary's other capital gains and losses) in working out the beneficiary's net capital gain or loss under section 102-5 of the ITAA 1997. In doing so, the beneficiary can apply their own capital losses and net capital losses and any relevant CGT discount is applied. | Detailed Reasoning - Conclusion: The ABC FT is a trust within the meaning of section 115-10 of the ITAA 1997. The capital gain resulted from a CGT event occurring after 21 September 1999. The capital gain is calculated without reference to indexation and therefore does not have an indexed cost base, consistent with section 115-20 of ITAA 1997. All shares were acquired by the ABC FT in 20YY and have therefore been held for more than 12 months at the time of the CGT event occurred. The capital gain arising from the disposal of the shares by The ABC FT qualified as a discount capital gain, and the applicable CGT discount of 50% applies in calculating the net capital gain for the ABC FT. You were made specifically entitled (for the purposes of section 115-228 of the ITAA 1997) to the entire amount of capital gain made by the ABC FT from CGT event A1 while you were an Australian resident. The ABC FT was vested and terminated soon after this time. You may be entitled to a 50% CGT discount under Division 115 of the ITAA 1997 in calculating the net capital gain. | Summary: In accordance with section 110-25(2) of the ITAA 1997, the first element of the cost base of a CGT asset comprises the total amount of money paid or required to be paid, and the market value of any other property given or required to be given at the time of acquisition. The actual amount paid by you was based on these X independent market valuations and is considered in the middle of the range of X independent market valuations, would likely represent an estimate of market value. You acquired the shares from the ABC FT by paying consideration of $X. The amount of consideration was based on the mid-range market valuation estimate of X independent professional market valuations conducted within months of the date of the actual transfer. On this basis, the first element of the cost base for you, under section 110-25(2) is $X representing the market value estimate of the shares at the time of acquisition. | Detailed Reasoning - Cost base: Subsection 110-25(1) of the ITAA 1997 states that 'the cost base of a CGT asset consists of 5 elements' . In accordance with section 110-25 ITAA 1997, you can work out the cost base of a CGT asset by adding these 5 elements: (1) Money paid or property given for the CGT asset (2) Incidental costs of acquiring the CGT asset or that relate to the CGT event (3) Costs of owning the CGT asset (4) Capital costs to increase or preserve the value of your asset or to install or move it (5) Capital costs of preserving or defending your title or rights to your CGT asset The first element of the cost base, as set out in section 110-25(2) consists of: (a) the money you paid, or are required to pay, in respect of acquiring it; and (b) the market value of any other property you gave or are required to give in respect of acquiring it (worked out as at the time of the acquisition). | Detailed Reasoning - Market value substitution: Under subsection 116-20(1) of the ITAA 1997, your capital proceeds from a CGT event include the total of the money you have received, or are entitled to receive, in respect of a CGT event happening. Where on the disposal of an asset no money or property is received, the market value substitution rule contained in section 116-30 of the ITAA 1997 generally applies, such that you are taken to have received the market value of your ownership interest in the shares at the time the CGT event occurs. If you sell, transfer or gift the shares to family or friends for less than it is worth, you'll be treated as if you received the market value of the property for CGT purposes. You use the market value of a property to calculate your CGT if both of the following are true: • what you received was more or less than the market value of the property; and • you and the new owner were not dealing with each other at arm's length. This is called the market value substitution rule. Company A Pty Ltd is a privately-owned Australian proprietary company, and the shares are not publicly traded. You have provided X independent market valuations done by professional valuation firms to help establish the fair market value of the shares at the time of transfer: • Valuations details supplied The actual amount paid by you was based on these X independent market valuations and is considered in the middle of the range of X independent market valuations, would likely represent the market value estimate. As it is deemed the consideration provided represents the market value estimate of the shares at the time of disposal, section 112-20 of the ITAA 1997 does not apply to substitute a different value to replace the cost base to you. | Detailed Reasoning - Conclusion: In accordance with section 110-25(2) of the ITAA 1997, the first element of the cost base of a CGT asset comprises the total amount of money paid or required to be paid, and the market value of any other property given or required to be given at the time of acquisition. You acquired the shares from the ABC FT by paying consideration of $X. The amount of consideration was based on the mid-range market valuation estimate of X independent professional market valuations conducted within months of the date of the actual transfer. On this basis, the first element of the cost base for you, under section 110-25(2) is $X representing the estimated market value of the shares at the time of acquisition. Section 112-20 of the ITAA 1997, therefore does not apply to substitute a different value to replace the cost base to yourself. | Summary: CGT event I1 happens when a taxpayer stops being a tax resident of Australia. The taxpayer is required to work out if they have made a capital gain or a capital loss for each CGT asset owned just before the time of the event, ie for each asset owned just before the taxpayer ceased to be an Australian resident - apart from assets that are taxable Australian property (section 104-160 of the ITAA 1997). You triggered a CGT event I1 when you ceased to be an Australian resident on DD MM 20YY. Under this event, you are deemed to have disposed of the assets immediately before the cessation of residency. Since the assets did not constitute taxable Australian property under section 855-15 of the ITAA 1997, and you do not intend to elect, to disregard capital gains or losses under section 104-165(2) of the ITAA 1997, a deemed disposal will be applied to the assets held on the date of cessation of residency. | Detailed Reasoning - Detailed reasoning: CGT event I1 happens when a taxpayer stops being a tax resident of Australia. The taxpayer is required to work out if they have made a capital gain or a capital loss for each CGT asset owned just before the time of the event, ie for each asset owned just before the taxpayer ceased to be an Australian resident - apart from assets that are taxable Australian property (section 104-160 of the ITAA 1997). However, an individual can choose to disregard making a capital gain or loss from the CGT assets covered by CGT event I1 (the choice can only be made for all assets owned). If he or she so chooses each of those assets is taken to be taxable Australian property until the earlier of: a) a CGT event happening in relation to the asset, and b) the individual again becoming an Australian resident (section 104-165 of the ITAA 1997). The choice is made when lodging the income tax return for the relevant income year. Section 855-10 of the ITAA 1997 provides that a capital gain or loss from a CGT event is disregarded if you are a foreign resident just before the CGT event happens and the CGT event happens in relation to a CGT asset that is not taxable Australian property. Consequences for you of holding options when CGT event I1 happens: • On ceasing tax residency, work out the amount of any capital gain or loss on the options. • If the options are disposed of in the future (not exercised) when a non-resident, any capital gain or loss would be disregarded under section 855-10 of the ITAA 1997 as the options are not taxable Australian property. • After the options are exercised and shares acquired, any capital gain or loss on the subsequent disposal of the shares while a non-resident is disregarded under section 855-10 of the ITAA 1997 as the shares are not taxable Australian property. | Detailed Reasoning - Conclusion: You triggered a CGT event I1 when you ceased to be an Australian resident on DD MM 20YY. Under this event, you are deemed to have disposed of the assets immediately before the cessation of residency. Since the assets did not constitute taxable Australian property under section 855-15 of the ITAA 1997, and you do not intend to elect, to disregard capital gains or losses under section 104-165(2) of the ITAA 1997, a deemed disposal will be applied to the assets held on the date of cessation of residency. | Summary: 'Market value' is defined in subsection 995-1(1) of the ITAA 1997 as 'has a meaning affected by Subdivision 960-S.' Section 960-400 of the ITAA 1997 states The expression "market value" is often used in this Act with its ordinary meaning. As you purchased the shares for market value estimate from the ABC FT and was subject to a deemed disposal under CGT event I1 immediately after acquisition of the shares, there was likely no movement in the market value estimate of the shares between the time of the acquisition and deemed disposal. Further, as you were granted the personal shares at market value estimate immediately prior to your date of departure, there was likely no movement in the market value estimate of the personal shares between the time of grant and deemed disposal. | Detailed Reasoning - Detailed reasoning: Market value is defined in subsection 995-1(1) of the ITAA 1997 as 'has a meaning affected by Subdivision 960-S.' Section 960-400 of the ITAA 1997 states 'The expression "market value" is often used in this Act with its ordinary meaning'. Market value generally takes its ordinary meaning for tax purposes. The most common definition for market value is derived from the High Court case of Spencer v The Commonwealth of Australia [1907] HCA 82 ( Spencer v The Commonwealth ). In this case, it was held that a valuation of land should be based on the price that a willing purchaser at the date in question would have had to pay to a vendor 'not unwilling, but not anxious to sell'. In looking to apply the concept of a 'willing buyer and willing seller' to ascertain the market value of land, Griffith CJ commented in Spencer v The Commonwealth that: ...the test of value of land is to be determined, not by inquiring about what price a man desiring to sell could have obtained for it on a given day, i.e. whether there was, in fact, on that day a willing buyer, but by inquiring: What would a man desiring to buy the land have had to pay for it on that day to a vendor willing to sell it for a fair price but not desirous to sell? The definition of market value in Spencer v The Commonwealth identified the following principles: • the purchaser is willing but not anxious to buy • the seller is willing but not anxious to sell and • the purchaser is assumed to be independent and dealing at arm's length with the seller. The expression 'net value of CGT assets', as used in section 152-15, was also examined in Syttadel Holdings Pty Ltd v FC of T [2011] AATA 589 ( Syttadel Holdings ) and Venturi v FC of T [2011] AATA 588. In both cases, the Tribunal confirmed that the relevant enquiry was as to market value according to its ordinary meaning, as noted in Spencer v The Commonwealth . In Syttadel's case the most appropriate methodology for calculating market value was considered to be by an objective business valuation. A Decision Impact Statement (DIS) on Syttadel Holdings was released by the Commissioner in February 2012. In that statement, the ATO generally considers the sale price of an asset to be its market value. However, in each particular case, all the relevant facts and circumstances must be taken into account to determine the most appropriate methodology for calculating market value. In Excellar Pty Ltd v FCT [2015] AATA 282, the AAT held that the selling price of a particular parcel of land was the best evidence of its market value at the relevant date. More recently in the Federal Court, Wigney J in FCT v Miley [2017] FCA 1396 found at paragraph 81 that: Where the asset in question has been the subject of a recent arm's length sale, it is generally unnecessary to hypothesise. If the recent sale transaction can be said to be one between a willing but not anxious seller, and willing but not anxious buyer, the price that the buyer and seller actually agreed on may generally be taken to be the market price, or at least a reliable indicator, if not the best evidence, of the market price Guidance on the process to establish a market valuation for various taxation purposes is contained in ATO publication, Market Valuation for tax purposes . The guide outlines accepted principles of valuation, and supplements other advice and guidance provided by the ATO on valuation matters. In the publication, reference is made to the judicial interpretation of the term. The case of Spencer v The Commonwealth is summarised as recognising the following principles: • the willing but not anxious vendor and purchaser; • a hypothetical market; • the parties being fully informed of the advantages and disadvantages associated with the asset being valued; and • both parties being aware of current market conditions. It is further noted that various valuation methods may be employed, but that valuations undertaken by persons experienced in their field of valuation would be expected to provide more reliable values than those provided by non-experts. Additionally, to ensure the objectivity of the report, the valuer should be independent of the interests of the party commissioning the report. As you purchased the shares for market value estimate from the ABC FT and was subject to a deemed disposal under CGT event I1 immediately after acquisition of the shares, there was likely no movement in the market value estimate of the shares between the time of the acquisition and deemed disposal. Further, as you were granted the personal shares at market value estimate immediately prior to your date of departure, there was likely no movement in the market value estimate of the personal shares between the time of grant and deemed disposal. | Detailed Reasoning - Conclusion: On DD MM 20YY, (the date you ceased Australian tax residency), your assets comprised of the following: • The shares with a cost base of $X and • Personal shares with a cost base of $X. The services of X independent professional valuers were engaged in order to help determine an estimate of market value of the assets based on professional valuation standards. The valuation reports were undertaken by independent professional valuers experienced in this type of market valuations. The total market value estimate based on these valuations of your assets on the date of disposal was $X. The capital gain calculated pursuant to section 104-160(4) of ITAA 1997 is the difference between the market value estimate on the date of deemed disposal and the cost base of the assets based on these market valuation estimates. This means the capital gain calculated on basis is nil.