What Makes a Valuation Defensible?
A CGT valuation should be more than a number. A defensible valuation is one that could reasonably withstand scrutiny — from the ATO, a court, or another party to a transaction — because it shows its working rather than presenting a bare figure.
The evidence checklist
Generally, a defensible valuation considers:
- •The specific property, its location and improvements
- •The relevant valuation date
- •Comparable transactions and available market evidence
- •Market conditions at the valuation date
- •Appropriate, recognised valuation methodology
Who can actually provide a CGT valuation?
There isn't a single mandated qualification, but the consistent expectation is that the person preparing a valuation for tax purposes has suitable knowledge, skill and experience, and remains independent and objective throughout. In practice, this generally points to a suitably qualified, registered or certified property valuation professional — rather than a real estate agent, a friend with local knowledge, or anyone with a personal or financial stake in the outcome.
Why methodology matters
Two valuers looking at the same property should arrive at a similar figure if they're both using sound, recognised methodology and comparable evidence. A defensible valuation shows its working — the comparable sales considered, the adjustments made, and the reasoning behind the final figure — rather than presenting a number without support.
What a valuation report should set out
- •The valuer's identity, qualifications and a statement of independence
- •The specific property and the exact valuation date
- •The methodology applied, and why it suits the property
- •The comparable evidence relied on
- •The reasoning connecting that evidence to the final figure
Common reasons valuations get challenged
Valuations are more likely to be challenged when they're prepared without a physical understanding of the property, when they don't reference the relevant date, or when the person preparing them has a conflict of interest — for example, an agent's appraisal prepared to help win a listing.
The taxpayer's responsibility
Even when a qualified valuer prepares the report, responsibility for supporting the figure used in a tax return generally sits with the taxpayer. That's why it pays to brief the valuer properly — sharing the purpose, the required date, and any relevant history of the property — rather than treating the valuation as a box-ticking exercise.
Guide disclaimer: The taxpayer retains responsibility for supporting a valuation used for tax purposes. Please confirm requirements with your tax adviser.
FAQs
Not necessarily. Being prepared by a licensed or qualified valuer is an important starting point, but a defensible valuation also needs to be prepared as at the correct date, use recognised methodology, and be supported by comparable market evidence. A qualified valuer who skips these elements can still produce a report that doesn't hold up under scrutiny.
