The ATO apportionment method, explained

Not every business needs a signed valuation at the 2027 transition. The ATO's apportionment method is free, published, and — for a well-behaved set of facts — entirely sufficient. Knowing which side of that line you are on is worth more than any argument about which approach is better in principle.

What the method does

Where a business interest has grown in value across the transition, the apportionment method splits that growth between the period before the reset date and the period after it. Rather than requiring a market value at 30 June 2027, it assumes value accrues evenly across the ownership period — a straight line — and apportions the gain on that basis.

It is a deliberate convenience. It spares owners the cost and delay of a formal valuation where the difference between a formula and a considered opinion is unlikely to matter.

When it is the right answer

• The holding period is long and the value has moved roughly in step with it.
• Earnings are steady, the business is uncomplicated, and nothing on the horizon changes its shape.
• The amounts at stake are modest enough that the cost of a full valuation would be disproportionate.
• No third party — a buyer, a lender, a court — is likely to want to test the number.

If that describes your business, use the free method and keep your money. A valuation bought when it was not needed is worth nothing.

Where a straight line stops being true

A straight line is an assumption, not a description, and businesses rarely grow evenly. A business that doubled in its final year, one whose value sits mostly in goodwill and customer relationships, or one holding property or a licence that has re-rated — those are cases where the formula produces an answer a third party can pull apart. So are businesses whose recorded profits have been shaped more by the owner's tax planning than by the market.

In each of those cases the gap between the formula's answer and a defensible one can be large, and it is the owner who carries the risk of the difference.

The honest comparison

The question is not which route sounds more rigorous. It is which route will still hold up when someone asks how you arrived at the number — and what the difference between the two answers is worth to you. Where the method is enough, we will say so plainly.

Start with the free indicative range and it will tell you which side of that line your business sits on.