{"id":648,"date":"2021-08-04T00:45:26","date_gmt":"2021-08-04T00:45:26","guid":{"rendered":"http:\/\/www.trakaccountants.com.au\/blog\/?p=648"},"modified":"2021-08-04T00:45:31","modified_gmt":"2021-08-04T00:45:31","slug":"requirement-apportion-price-goodwill-equipment","status":"publish","type":"post","link":"https:\/\/www.trakaccountants.com.au\/blog\/requirement-apportion-price-goodwill-equipment\/","title":{"rendered":"Is there any requirement for the sale contract to apportion the price between goodwill and equipment?"},"content":{"rendered":"\n<h2 class=\"wp-block-heading\">Question<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">We have a client that is purchasing a business from an unrelated party. Is there any requirement for the sale contract to apportion the price between goodwill and equipment? If not, can the vendor and purchaser each make their own reasonable apportionment? Does the ATO have a position on this?<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Answer<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">In relation to the allocation of the sale proceeds to different types of assets, according to TD 98\/24, the ATO\u2019s position is that in the absence of an agreed allocation between the parties, each party needs to make their own reasonable apportionment of the capital proceeds to the separate assets. In making this apportionment, it is expected that each party would generally have regard to, and be able to justify, their reasonable apportionment based on the relevant market values of the separate assets at the time of the making of the contract.<br><br>Therefore, the onus is on the taxpayer to be able to justify their allocation.&nbsp;<br><br>As a common practice, the parties which are dealing at arm\u2019s length should agree to the allocation so as to avoid any uncertainty from a tax perspective.<br><br>For more information, please refer to&nbsp;<a href=\"https:\/\/www.ato.gov.au\/law\/view\/document?DocID=TXD\/TD9824\/NAT\/ATO\/00001&amp;PiT=99991231235958\">TD 98\/24<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Apportioning goodwill and equipment in sale contract <\/p>\n","protected":false},"author":2,"featured_media":649,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"cybocfi_hide_featured_image":"yes","_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[39],"tags":[86,88,87],"class_list":["post-648","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-qas","tag-apportion","tag-equipment","tag-goodwill"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.7 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Is there any requirement for the sale contract to apportion the price between goodwill and equipment? 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