Updated 11 October 2026
When property moves between related parties, the price on the transfer is not the price the ATO uses. Sections 116-30 and 112-20 substitute market value on both sides of the transaction, so a transfer at a friendly figure produces a full market value tax outcome. We establish that value from $297 inc. GST.
At a glance
Section 116-30 of the Income Tax Assessment Act 1997 replaces your actual capital proceeds with the market value of the asset where you received nothing for it, and where the proceeds were more or less than market value and the parties did not deal at arm's length.
Section 112-20 mirrors it for the person acquiring the asset. Where they paid nothing, paid something other than market value in a non-arm's length dealing, or acquired the asset other than under a contract, their first element of cost base becomes market value.
Together the two provisions close the obvious gap, and a capital gains tax valuation is what supplies the figure they call for. Without them, a family could move an appreciating asset around at nominal prices and never trigger a gain. With them, the price recorded on the transfer is largely irrelevant to the tax outcome.
The common thread is that the parties are not strangers negotiating at arm's length. A genuine arm's length sale to an unrelated buyer at a bargain price is a different matter; a low price agreed between family members is not.
Penalty risk
The figure has to be supportable, not convenientWhere a transfer is reported at a market value that cannot be evidenced, the ATO can substitute its own figure. Under section 284-90 of Schedule 1 to the Taxation Administration Act 1953, shortfall penalties run at 25 per cent for failure to take reasonable care, 50 per cent for recklessness and 75 per cent for intentional disregard, with interest on top that is no longer deductible. An independent valuation obtained before the transfer is what supports a reasonable care position.
The transferor is assessed on market value as capital proceeds. The transferee takes market value as their cost base. If the two use different figures, one of them is wrong, and the mismatch is visible the moment either return is examined.
One independent valuation, obtained before the transfer and used by both parties, resolves that. It also gives the recipient a documented starting cost base for a sale that may be twenty years away, when nobody remembers what the property was worth on the day it changed hands. For a transfer from a parent to a child, our guide to gifting property to your children works through what each side pays and the valuation date.
Note
Worked exampleA parent bought an investment unit in 2010 for $340,000, with $16,000 of acquisition costs. In 2026 they transfer it to their daughter for $200,000 to help her into the market. Market value at transfer is $610,000.
The parent is treated as having received $610,000, not $200,000. The gain is $610,000 less the $356,000 cost base, being $254,000, halved by the 50 per cent discount to $127,000 assessable. Tax is payable even though only $200,000 changed hands.
The daughter takes a cost base of $610,000, not $200,000, which is the one piece of good news in the transaction: her future gain is measured from the higher figure.
Without a valuation, neither figure is evidenced. With one, both returns rest on the same documented number.
The cash flow problem is the part families rarely anticipate. The parent has a tax liability and did not receive the money to fund it. Identifying that before the transfer, rather than at lodgement, is usually the difference between a manageable plan and a forced sale.
The substituted market value also becomes the cost base the capital gains tax changes from 1 July 2027 work from. Run the property through our CGT calculator to see the reset applied.
Get the market value evidenced before the transfer, not after. Independent reports signed by a Chartered Accountant and Certified Property Valuer. Residential $297, commercial $595, AUD inc. GST, delivered in 24 to 48 hours.
Start your orderHow it worksA fund generally cannot acquire assets from a related party, with business real property one of the limited exceptions. Where an acquisition is permitted, it must be at market value, and the evidence for that value has to exist at the time of the transaction rather than being assembled afterwards.
Two things ride on the figure beyond the CGT position. In-specie contributions count against contribution caps at market value, so an unsupported number can create an excess contribution. And dealings that are not on commercial terms risk income being treated as non-arm's length and taxed at a punitive rate. See SMSF property valuations.
State and territory revenue offices assess transfer duty on the greater of the consideration and the market value, so a related-party transfer usually attracts duty on the full value regardless of what was paid. That is a separate assessment under separate legislation from the CGT position.
A properly evidenced valuation supports both conversations, but they are not the same conversation and a revenue office is not bound by a figure prepared for CGT purposes. Confirm the duty treatment with your conveyancer or accountant before completing the transfer.
Every revenue office assesses duty on a related party transfer at market value, and every one of them asks for evidence of that value. What counts as evidence, who may prepare it and how recent it must be differ from state to state. A stamp duty valuation prepared for the transfer date, with documented comparable sales, is the one document that meets each office's request and fixes the CGT figure at the same time. The state-by-state detail sits on our stamp duty valuation page and on our city pages:
| Report | Fee (AUD inc. GST) | Turnaround |
|---|---|---|
| Residential, at transfer date or a past transfer date | $297 | 24 to 48 hours |
| Commercial, at transfer date or a past transfer date | $595 | 24 to 48 hours |
Where a transfer has already happened without a valuation, a retrospective report for the transfer date is prepared at the same fee. See our backdated valuation service.
Yes, in nearly every case. Sections 116-30 and 112-20 assess both parties on market value regardless of the price recorded on the transfer, so the market value has to be established and evidenced. The same report supports the transferor's capital proceeds and the transferee's cost base.
It is the rule in section 116-30 that replaces your actual capital proceeds with the asset's market value where you received nothing, or where the parties did not deal at arm's length and the price was more or less than market value. Section 112-20 applies the equivalent rule to the acquirer's cost base.
No. A nominal price does not change the tax outcome. The transferor is assessed on the market value of the property as though it had been sold at that figure, which frequently produces a tax liability without any cash to fund it.
A retrospective valuation for the transfer date establishes the market value from sales evidence of that period, at the same fee as a current report. It supports both the transferor's position and the recipient's cost base, which still matters whenever they eventually sell.
