The market-value evidence a 328-G restructure roll-over requires.

A Subdivision 328-G small business restructure roll-over lets an eligible small business entity — aggregated turnover under $10 million — transfer active assets between related entities without an income tax liability. Although the assets roll over at cost, market-value evidence is still required: to prove the transfer causes no material change in ultimate economic ownership, to identify and substantiate each active asset (goodwill above all), to size any shares or units issued so each owner's proportion is preserved, and to fix the fallback capital proceeds if the roll-over is later denied and market value substitution under s 116-30 applies. Unsubstantiated goodwill and plug asset values are the ATO's biggest red flag. Oliver Group prepares the independent market-value evidence; whether the roll-over is available is a matter for your accountant.

What Subdivision 328-G is — and where market value hides in a 'tax-neutral' roll-over

Subdivision 328-G of the ITAA 1997 — the small business restructure roll-over, available since 1 July 2016 — lets an eligible small business move active assets from one entity to another without triggering an income tax liability. A sole trader can incorporate; a company's business can move into a discretionary trust; two partners can reorganise under a holding structure. Because the assets roll over at their existing cost (under s 328-455 the transferee is taken to have acquired them for the transferor's cost, inheriting the cost base and acquisition dates), owners often assume no valuation is needed — nothing is being 'sold', so why value it? That assumption is where restructures come undone. Market value does not set the tax on the transfer, but it is load-bearing in four places the roll-over cannot work without: proving the transfer causes no material change in ultimate economic ownership, identifying and characterising each asset as an active asset, sizing any shares or units issued so each owner's proportion is preserved, and fixing the fallback capital proceeds under the market value substitution rule if the roll-over is ever denied. This page sets out the market-value evidence a 328-G restructure actually requires. It is evidence, not tax advice: whether the roll-over is available to you is a question for your accountant or registered tax agent.

The conditions your market-value evidence has to stand behind

A 328-G roll-over is available only if every condition in s 328-430 is met. Your valuation cannot make the roll-over available — that is a tax question — but several of these conditions can only be satisfied with market-value evidence behind them. The conditions, in plain terms:

• ·Genuine restructure — the transaction is, or is part of, a genuine restructure of an ongoing business (s 328-430(1)(a)), not a disguised sale or a preliminary step to realising the assets (see the next section).
• ·Small business entity — each party to the transfer is a small business entity for the income year, or an affiliate of / entity connected with a SBE, or a partner in a partnership that is a SBE (s 328-430(1)(b)). A small business entity carries on a business with aggregated turnover under $10 million (s 328-110) — the $10m threshold, not the $2m turnover or $6m maximum net asset value tests used for the Division 152 small business CGT concessions.
• ·Active asset — the thing being transferred is a CGT asset that is an active asset (or trading stock, a revenue asset, or a depreciating asset) used in the business at the time of the transfer (s 328-430(1)(d), applying the active-asset meaning in s 152-40).
• ·No material change in ultimate economic ownership — the transaction does not materially change which individuals ultimately own the asset, and where more than one individual has that ownership, each individual's share is materially unchanged (s 328-430(1)(c)).
• ·Australian residency — both the transferor and each transferee meet the residency requirement (s 328-445).
• ·Both parties choose to apply the roll-over (s 328-430(1)(g)), and neither is an exempt entity or a superannuation fund (s 328-430(2)).

The 'genuine restructure of an ongoing business' test — and the 3-year safe harbour

'Genuine restructure of an ongoing business' is the condition the ATO scrutinises hardest, and it is set out in Law Companion Ruling LCR 2016/3. It is a question of fact judged on all the circumstances. The ruling's indicative markers of a genuine restructure are that it is a bona fide commercial arrangement undertaken to enhance business efficiency; the business continues to operate after the transfer, through the same or a new entity; the transferred assets continue to be used in that ongoing business; and the arrangement is not artificial, unduly tax-driven, or a preliminary step to divesting or economically realising the assets. A restructure done to package a business up for an imminent sale is the paradigm of what fails. Section 328-435 adds a 3-year safe harbour: the restructure is taken to be genuine if, for three years after the transfer, there is no change in the ultimate economic ownership of the significant assets transferred (other than trading stock), those assets continue to be active assets, and there is no significant private use of them. Where market-value evidence supports this test is in demonstrating what the 'significant assets' were and what they were worth at the transfer date — the reference point against which the three-year continuity is later measured.

'No material change in ultimate economic ownership' — why a tax-neutral roll-over still needs valuations

This is the condition that turns a 'tax-neutral' roll-over into a valuation exercise. Ultimate economic ownership looks through interposed companies and trusts to the individuals who ultimately benefit from an asset — for a company, the individuals behind the shares; for a fixed trust, the individuals behind the units. The roll-over requires that those individuals, and their proportions, do not materially change. When a restructure issues new shares or units as part of the transfer — a sole trader's business moving into a company where the trader takes the shares, or two partners reorganising into a unit trust — the market value of what each person contributes has to match the value of the interests they receive, or the proportions shift and the condition fails. You cannot show proportions are unchanged without valuing both sides. Discretionary (non-fixed) trusts get a specific accommodation: under s 328-440, where an asset is included in the property of a family trust that has made a family trust election, the ultimate economic ownership condition can be satisfied on that basis rather than by tracing to individuals — recognising that a discretionary trust has no fixed proportionate owners. Even then, the market value of the assets moving in or out still has to be established for the roll-over cost and for any state duty. In every multi-owner restructure, unequal or unsupported asset values are the fastest way to breach this condition without anyone intending to.

What each active-asset and goodwill valuation must demonstrate

Each asset the roll-over moves has to be identifiable, characterised correctly, and valued on evidence — not entered as a residual figure. Goodwill is where this matters most and where files most often fail. Goodwill is an active asset because it is an intangible asset inherently connected with the business (s 152-40), but only transferable goodwill attaching to the business itself counts — goodwill that is really personal to the owner (a professional's personal reputation, relationships that leave when they do) is not a business asset that transfers, and a valuation that treats it as though it does is unsupportable. The recurring ATO red flag is goodwill entered as a plug: total business value less the identifiable tangible and intangible assets, with no independent basis for the residual. A defensible file does the opposite — it derives an enterprise value from a recognised method (capitalised future maintainable earnings, or discounted cash flow), attributes value to each identifiable asset on its own evidence, and shows goodwill as what remains only after that attribution stands on its own. What each valuation has to demonstrate:

Unsubstantiated goodwill, the market-value-substitution fallback, and which engagement fits

The evidence standard is the one the ATO's market valuation guidance applies everywhere: a recognised methodology, contemporaneous evidence available at the transfer date, and a report documented so another valuer could replicate the conclusion — market value in the Spencer sense of a willing but not anxious buyer and seller, consistent with IVS 104 and reported to APES 225. There is a second reason to get the values right even though the transfer is tax-neutral. If the roll-over is later denied — the restructure is found not to be genuine, the ownership condition is breached, or an entity fails the SBE test — the transfer is between non-arm's-length parties, so s 116-30 ITAA 1997 substitutes the market value of the assets as the capital proceeds and the transferor is taxed on that figure. Supportable market values are therefore the roll-over's insurance: they underpin the conditions while it holds and they fix the exposure if it does not. Our /tools/market-value-substitution tool explains where the substitution rule bites; the defensible number behind it is the valuation, and /tools/sbe-concession-check helps confirm the $10 million small business entity gate before the valuation work begins. On scope: restructures almost always involve at least two entities — a transferor and a transferee — so fee and depth follow the number of entities and the evidence the file needs, not the size of the business. Essential (from $1,495 + GST) suits a straightforward single-asset transfer with modest, uncontentious values. Most 328-G restructures sit at Comprehensive (from $3,995 + GST), which tests multiple methods, values each active asset and the goodwill separately, and documents the supportable range and the reasoning behind the concluded figures. Where review is likely, the goodwill is significant, or the restructure sets up a later Division 152 concession claim, the Defensible Valuation File (from $8,995 + GST) builds the full working-paper trail. Additional entities are $750 each — relevant to nearly every restructure — retrospective transfer dates are $495 per date, and urgent matters can be accelerated at +30% of the base fee. Every report is signed by a senior reviewer and the working file is retained for ten years; our lead valuer, Jackson Wilson, has personally valued more than 3,000 businesses over his career. We take no referral fee or commission from your accountant — paying for referrals would compromise the independence the ATO expects, so we do not do it. The market-value evidence for your restructure is set out at /services/restructure-valuation. One boundary stated plainly, as always: Oliver Group prepares independent valuations only. We are not a registered tax agent and do not advise on whether a 328-G roll-over is available or how to structure one — that is your accountant's or tax agent's role, and we work alongside them.