Why the instruction matters
A valuation answers a specific question. If the question is vague, the answer may be correct and still useless: the right business at the wrong date, all the shares when the client owns a third, or a market value when the purpose needed something else.
For valuations used for tax, the ATO puts much of this on the taxpayer. Its guidance says that when you engage a valuer you must give them clear instructions and accurate information, and that instructions are usually documented in a written request or letter of engagement. Its longer guide adds that if the ATO reviews a valuation, the information it asks for often includes the instruction given to the valuer. As the accountant ordering the work, you are usually the person who writes that instruction.
This checklist is for you. If your client wants to know which documents to gather, give them the business valuation preparation pack, which is written for owners.
The checklist
Ten items to settle in writing before work starts
The question
- Purpose, and for tax the provision
- Valuation date, and whether it is retrospective
- The exact asset or interest
- Basis of value and any special assumptions
The report
- Report type and who will rely on it
- Standards and disclosures the valuer will state
- Instructions that could affect the result
The process
- Information and access
- Independence, and a fee not tied to the result
- Previous valuations
| Item | What to agree in writing | Why it matters |
|---|---|---|
| 1. Purpose | The reason for the valuation and, for tax, the provision it is for (for example, a transfer between related parties or a small business CGT test) | The ATO guide says a tax valuation should be specific to the provision it is applied to; purpose also drives method and report type |
| 2. Valuation date | The exact date, and whether it is in the past (retrospective) | The ATO lists the date, and whether the valuation is retrospective, among the minimum report contents; for tax, a valuation for a future date is not acceptable |
| 3. The asset or interest | The entity, and whether the subject is the business assets, all the shares or units, or a particular holding, with its percentage and class | The ATO guide expects the interest and its rights to be specified; a holding may not be worth its percentage of the whole |
| 4. Basis of value | Usually market value; say if a statute or agreement defines value differently, and state any special assumptions | The guide notes that market value can be defined differently in particular provisions, and that fair value for financial reporting is not the same concept |
| 5. Report type and users | A full report, a limited-scope report or a calculation; who will rely on it and for what | A report written for one user and purpose may not suit another; a court expert report has its own content rules |
| 6. Information and access | Which records, people and premises the valuer will have access to, and by when | The ATO's list of what instructions should show includes access to premises and records and all necessary help |
| 7. Independence and fee | That the valuer is free to reach and write their own conclusions, can decline to give an opinion without the information they need, and is paid a fee that does not depend on the result | Each of these appears in the ATO's list of what instructions should demonstrate |
| 8. Previous valuations | Copies of any earlier valuations, with their date and purpose | The ATO guide expects a valuer relying on a previous valuation to explain its relevance and any differences |
| 9. Standards and disclosures | Ask the valuer to state any professional standards that govern the engagement, their independence and any conflicts | The ATO guide lists these among the matters it expects a report to cover |
| 10. Instructions that affect the result | Any assumption the client wants made (for example, that a lease will be renewed) | The guide says the report should disclose instructions that have affected, or are likely to affect, the valuation |
Worked example: tightening a vague instruction
This example is hypothetical.
An accountant's first draft reads: "Please value Smith Plumbing for Mr Smith's restructure."
Working through the checklist exposes the gaps. Smith Plumbing is a trading name; the business is run by a company. Mr Smith owns 25% of the shares; a family trust owns the rest. The restructure is a transfer of his shares to the trust, so the relevant date is likely to be the date of the share transfer (the contract date, if there is a contract of sale, because the ATO explains that the CGT event then happens when the contract is entered into) and the purpose is a related-party transfer for tax.
The revised instruction reads: "Market value of 25% of the ordinary shares in Smith Plumbing Pty Ltd, as at the date of the proposed share transfer contract, for the purpose of the transfer of those shares to a related party. Please also state the value of 100% of the shares and explain any difference between the 25% holding and a pro rata share."
The last sentence matters. If 100% of the shares were valued at $2,000,000, a pro rata share would be $500,000.
A 25% holding is $500,000 pro rata, but may be worth less without control
- Mr Smith's 25% holding (pro rata) $500,000
- Family trust's 75% $1,500,000
Asking for both figures makes the treatment visible. Because the buyer is the family trust that already holds the other 75%, the instruction should also say that any extra value to that particular buyer is to be disregarded, as market value assumes a hypothetical willing buyer, not a special purchaser. See is a minority shareholding worth its percentage and business, shares or units: what is being valued.
Check: $2,000,000 x 25% = $500,000.
Common gaps and how to close them
| Vague instruction | Problem | Better instruction |
|---|---|---|
| "Value the business" | Business assets or shares? Which entity? | Name the entity and say whether the subject is the business assets, all the shares or a holding |
| "Current value" | Current at report date, at a contract date or at year end? | State the exact date, and say if it is retrospective |
| "For the bank and the ATO" | Two users with different needs | Agree one primary purpose, or ask whether separate reports are needed |
| "Use the accounts we sent" | No access to management or later information | List the records, people and site access the valuer will have |
| "Fair value" | A financial reporting term that is not the same as market value | Say which basis applies and why |
Limitations
- This checklist is general. Some purposes have their own requirements: a statute may define value or the valuer's qualifications, a shareholders agreement may set a formula, and a court has its own rules for expert reports.
- In family law matters, follow the instruction process your client's lawyer runs. For proceedings in the FCFCOA, rule 7.22 of the Family Law Rules sets out what an expert's report must contain.
- A well-written instruction does not determine the value, and it does not remove the need for the valuer to form an independent view.
- Nothing here is tax or legal advice about which provision applies to your client.
Next steps
- Draft the instruction using the ten items above and send it with the engagement letter.
- Settle the valuation date first; see choosing the valuation date.
- Gather the reconciled financial schedules described in our guide for accountants on preparing financial information for a valuation.
- Send your client the business valuation preparation pack so the documents arrive at the same time.
Questions
Is an email asking for a valuation enough as an instruction?
It can start the conversation, but the ATO says instructions are usually documented in a written request or letter of engagement, and its list of what instructions should show is longer than most emails. Agree the items on this page in the engagement letter.
Should I tell the valuer the value my client expects?
Give the valuer the facts, documents and any prior valuations, and explain their purpose. A target figure is not information about the business, and an instruction that appears to steer the result can undermine the report.
What if we do not yet know the valuation date?
Settle it before work begins. For tax purposes the provision usually fixes the date, and a valuation at the wrong date will not meet the requirement. Our guide to choosing the valuation date explains the common cases.
Does a court valuation need a different instruction?
Yes. In family law proceedings in the FCFCOA, expert reports must meet the content requirements of rule 7.22. Use the court-specific letter of instruction your client's lawyer prepares.
Sources
- Market valuation of assets, Australian Taxation Office. What instructions to a valuer should show (scope and purpose, independence, right to refuse, access, help, fee not dependent on outcome) and the minimum contents of a report, including whether it is retrospective.
- Market valuation for tax purposes, Australian Taxation Office (Legal Database). Guide current at February 2025: the tax provision frames the asset and the valuation date; the interest valued should be specified; previous valuations and instructions affecting the valuation should be explained; fair value is not the same as market value.
- Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Compilation No. 4, 10 June 2025), Federal Register of Legislation. r7.22: required contents of an expert's report for family law proceedings in the FCFCOA.
- CGT events, Australian Taxation Office. Where there is a contract of sale, the CGT event happens when the contract is entered into, not at settlement.
Cite or reuse this page
Valuo Insights team (2026). Valuation instruction checklist for accountants. Valuo. https://valuo.com.au/insights/valuation-instruction-checklist/ (updated 14 November 2026).
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General educational information, not financial, tax or legal advice. Worked examples are hypothetical and do not value a real business. A valuation depends on its purpose, the evidence and the agreed scope.