Ensuring fair and reasonable compensation

Government acquisition for infrastructure

As more infrastructure is required with limited space, it’s not uncommon for businesses to be compulsorily acquired by the government. However, compulsory acquisition can be a daunting prospect, whether it’s for new highways or airports. And compensation for the acquisition may not be at the level a business owner would expect, mainly where the process of being compensated is in two ways:

  1. by having to relocate (through lost profits), or
  2. based on ‘extinguishment’, meaning that it cannot be moved to another location, so it’s as if the government is ‘buying’ the business.

We have acted for businesses that have been in this situation and having to ensure that the business owner is fairly compensated. This will involve going through the business valuation process.

What to do if your business is acquired?

Should your business be compulsorily acquired, it’s critical to ensure the process you follow is as informed and robust as possible:

  • 1. Get a legal compulsory acquisition specialist

    Generally, legal, accounting and business valuation advice will be covered by the government. Having an experienced legal representative who deals with compulsory acquisitions regularly is critical.


  • 2. Take the option of getting independent advice (paid by the government)

    In situations of compulsory acquisition, your business will be approached by a government representative who will ask for various pieces of information so that they can make you an offer for your business.

    Always take the option of getting a second opinion from an independent expert, which the government will pay in most cases. This is because mistakes can be made. Naturally, the government will be trying to save the taxpayer as much money as possible by offering you the minimum it possibly can.

    Unfortunately, some business owners are quick to take whatever is offered as they are keen to settle and receive the proceeds quickly. This could mean they receive hundreds of thousands of dollars less than they could have despite being advised by the government that they are entitled to independent advice. Typically seeking advice can extend the process by approximately six months, but it can also achieve a dramatically different outcome in some cases.

  • 3. Getting a Second Opinion

    Most small business accountants will advise their clients to take the option of getting a second opinion. For example, suppose there is a dispute between the government’s advisers and your advisers. In that case, the Valuer-General can provide a different view that is binding on the government (in NSW) if you accept it. Otherwise, the issue may conclude in court.

How Tribel Accountants can help

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