Miscellaneous 2015

Common errors in applying the market value concept

Source: Taxation In Australia Journal Article

Published Date: 1 Jul 2015


Despite the widely accepted definition of market value based on the High Court decision in Spencer v The Commonwealth, the application of the market value concept in practice has been subject to errors and dispute, with flow on tax and duty consequences. There are broadly two interrelated types of errors associated with the application of the market value concept: conceptual errors and measurement errors. This article examines some of the most common conceptual errors. These include failure to recognise the asset focus of the Spencer market value concept, failure to recognise the negotiated price focus of the Spencer market value concept, adoption of an incorrect unit of measurement, and adoption of an incorrect view of the impact of non-transferability on market value. The authors argue that recognition and avoidance of the errors discussed in this article are important in achieving a correct valuation outcome for tax and duty purposes.

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Miscellaneous 2015

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