BUSINESS TAX FACTSHEET
If you've decided the time has come to sell your business, then it's worth knowing whether you're entitled to Capital Gains Concessions.
There are lots of ways to sell your business, and the method you choose can result in vastly different taxation results. How you sell your business really matters.
For example, maybe you have a potential buyer who is considering purchasing your business after a trial period of 12 months.
You can grant an option to the buyer and the option fee will be assessable on a capital account in the year you enter into the contract. In this case, the payment will not be eligible for a 50% discount.
Once the twelve months have passed, if the option is taken up, you can then disregard the capital gain you made in the previous year and request an amendment of your income tax to exclude the amount (if the return has been filed). Depending on how long you've owned your business, you may be entitled to further CGT exemptions that may be available for small businesses.
Provided you satisfy a number of conditions, you may be able to further reduce your CGT via:
- 15-year exemption
- Active asset reduction
- Retirement exemption
- Replacement asset rollover relief
The most effective business sales are those that are well planned and proactive in having a sale-ready business to take advantage of the CGT rules.
Bates Cosgrave specialise in working with business owners to plan and implement effective financial, accounting and taxation strategies that are designed for their specific industry.
If you want to know more about how Capital Gains Tax may affect the sale of your business, contact Matt Zhou on 02 9957 4033 or via our contact form.
Download PDF Version Selling Your Business & CGT
Last updated November 2012. This factsheet is provided for information purposes only and is correct at the time of publishing. It should not be used in place of advice from your accountant.