Financial Planning

Financial Planning for Business Sales

Alman Partners can help you and your family achieve financial security through our tailored financial solutions. Specialising in business and personal financial planning, we can make your financial dreams a reality.

Our team has expert knowledge and experience in the following financial planning services:

  • Wealth accumulation
  • Tax planning
  • Gearing
  • Insurance
  • Finance and loan structures
  • Loan consolidation
  • Redundancy planning
  • Estate planning
  • Cash flow and budgeting

Being tax-smart when selling a small business

Selling a business can be a reward for years of hard work. But making the most of that reward is often down to careful planning, especially with regard to tax and superannuation.

Many business owners aren’t aware of the capital gains tax (CGT) concessions available when selling a business.

There are four main CGT concessions available to small business owners. Keep reading to learn more about each of these concessions:

15-Year Exemption

If you’re over 55 when you sell your business, you have owned it for a continuous period of at least 15 years, and the sale is made in connection with your retirement, you won’t pay CGT. Additionally, you may be able to contribute funds from this exemption to your super fund without affecting your non-concessional contributions limit.

Retirement exemption

If you’re under 55, the money from the disposal of your business is only CGT exempt if it’s paid into a compliant superannuation fund. In other words, you can choose to disregard any or all of a capital gain if the sale proceeds are put into a super fund.

A lifetime limit of $500,000 applies, but you can keep utilising this exemption over the course of multiple asset sales. This kind of exemption to your super fund also won’t affect your non-concessional contributions limit.

50% Active Asset Reduction

If you’re not ready to retire, or you haven’t owned your business for 15 years, you can elect to reduce CGT by 50% if the business qualifies as an active business asset. This is in addition to the 50% CGT discount that applies if you’ve owned the business for 12 months or more.

Rollover

By electing a rollover, you can reinvest the proceeds from the sale of your existing business into a new business. This will defer capital gains from the sale until you ultimately dispose of the new business.

You have up to two years post-sale to acquire a new business. The rollover provisions could also be used to defer your CGT obligations to a later income year.

It’s important to be sure you satisfy the basic conditions for these concessions. The turnover threshold for small business CGT concessions is $2 million. The maximum net value of all CGT assets must not exceed $6 million. Legislation around this eligibility was recently amended, as the $6 million net asset test was previously imposed on business owners, not the business itself.

If you’re unsure which CGT concessions apply to your business sale, speak to a tax specialist at Alman Partners today.

Making the Most of CGT Concessions

If used effectively, CGT small business concessions can provide substantial tax savings. In some cases, these can be accessed in combination with other CGT exemptions, rollovers and concessions that aren’t specific to small businesses.

A little strategic planning will also result in a large boost in retirement income. A true win-win, and it’s all made possible by being tax-smart.

The concessional 15% tax on superannuation contributions apply to contributions in any financial year of up to a maximum $25,000. A further maximum of up to $75,000 in any financial year can be made from after-tax earnings.

References

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