Most business owners think they understand valuations… until the tax bill proves them wrong. Here’s the trap: You assume your slice of the business is worth less—because it’s a minority stake.  Sounds logical. Sounds textbook. But what if that assumption costs you access to valuable CGT concessions?

That’s exactly what happened in the recent Full Federal Court decision in Kilgour v Commissioner of Taxation—and it’s a wake-up call for every business owner thinking about selling.

Back in 2016, three family trusts sold an online wagering business for $31 million. On paper, it was clean:

• 60% owner
• Two minority owners at 20% each
• A commercial, arm’s length deal with a major buyer

Now here’s where it gets interesting… The minority owners wanted to access small business CGT concessions. To qualify, they needed their net assets under $6 million. So they did what many advisers would consider “normal”:  They applied a minority discount to reduce the value of their shares.

But the ATO stepped in and said:  “Not so fast.” Their argument was simple:  This wasn’t a piecemeal sale.  This was a coordinated 100% sale.

And when the case went to court?  The Court agreed with the ATO.

The Shift That Matters

The Court leaned on the classic “willing buyer, willing seller” principle—but applied it in a real-world, commercial way (from Spencer v Commonwealth).

Two powerful lessons came out of it:

1. Reality beats timing rules
Even though tax law looks at value “just before” signing, the Court said you can’t ignore what’s already unfolding. If a deal is effectively locked in… That price becomes your best evidence of value.

2. Commercial context beats theory
Yes, minority discounts exist. But not when:

• All shareholders are selling together
• The buyer wants 100% control
• The deal only works as a whole

In that situation?  Your “minority stake” isn’t really minority anymore.  It rides the value of the entire deal.

This is where smart business owners separate themselves. Because the lesson isn’t just technical—it’s strategic:

• Don’t rely on textbook valuations when real money is on the table
• Don’t assume your stake is worth less—it might actually be worth more
• Don’t wait until the deal is signed to think about tax outcomes

The biggest takeaway

Valuation isn’t about theory. It’s about leverage, intent, and commercial reality. If you’re planning to sell, restructure, or even bring in investors—get your valuation strategy right early.

Because the difference between a “paper assumption” and a “defensible valuation”……can be the difference between unlocking CGT concessions—or missing them entirely. And in deals like this, that difference isn’t small.

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