""Words, dear taxpayers, mean whatever the ATO chooses them to mean - neither more nor less." (With apologies to Lewis Carroll )
In its draft tax determination TD 2008/D19, the ATO states that just because an IFRS compliant Australian accounting standard [AASB 138 Intangible Assets - paragraph 48] provides that internally “generated goodwill shall not be recognised as an asset” does not mean that such goodwill is not an asset for the purposes of Division 7A of the 1936 Tax Act.
To quote from TD 2008/D19:
"[the] considerations which cause accounting standards to preclude valuation of goodwill are not directly, or even at all, relevant to the taxation of informal company distributions. … [It] is not in itself conclusive against the exercise of the power to revalue assets to show that the company's accounting records are correctly prepared in accordance with the accounting standards."
According to the ATO therefore, it is "possible for a taxpayer to value its assets properly in accordance with accounting standards, but for the accounting standards to result in the undervaluation of the assets."
The shareholders in private companies that have prepared their accounts in accordance with Australian accounting standards will, on the basis of this draft tax determination, just have to rely on the ATO deciding "as a matter of practice … [not to] adjust the book value of assets shown in properly prepared accounts merely because the value of internally generated goodwill is omitted, and, more generally … [to] respect book values shown in proper accounts".
Maybe the Commissioner of Taxation, Michael D’Ascenzo, should ask for a position on the Australian Accounting Standards Board (“AASB”) so that he can take a hand in the drafting of Australian accounting standards - the ATO certainly seems to think that it knows better than the AASB when an asset exists and what the value of that asset is!
 'When I use a word,' Humpty Dumpty said in rather a scornful tone, 'it means just what I choose it to mean -- neither more nor less.' 'The question is,' said Alice, 'whether you can make words mean so many different things.' 'The question is,' said Humpty Dumpty, 'which is to be master - that's all.' Lewis-Carroll, Alice in Wonderland - Through the Looking-Glass."