Miscellaneous 2019

The Placer case (2018) from a valuation perspective

Source: Taxation In Australia Journal Article

Published Date: 1 Jul 2019


This article evaluates the landmark High Court decision in Commissioner of State Revenue v Placer Dome Inc from a valuation perspective and discusses a conceptual valuation framework which can be used to address several issues regarding the valuation of goodwill raised in the High Court decision. The key components of this conceptual valuation framework include: a distinction between the mere existence of legal goodwill and the materiality of its value; a focus on the going concern basis of valuation; an allowance for the evolutionary changes in the market value of identifiable assets; a recognition of the forward-looking net and active attractive forces which bring in custom as key drivers of goodwill value (rather than backward-looking, gross or passive attractive forces); and a recognition of excess profits/cash flows as a reliable indicator of the existence of material goodwill value. This conceptual valuation framework should be applied in accordance with the specific legal and factual context in which the relevant valuation exercise arises.

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Miscellaneous 2019

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