Navigating the sale of a small business in Australia involves understanding the available Capital Gains Tax (CGT) concessions, which can significantly impact the financial outcome. These concessions are designed to support small business owners by reducing or eliminating the CGT payable upon the sale of business assets.
Key Small Business CGT Concessions:
15-Year Exemption:
If you've owned your business for at least 15 years and are aged 55 or over, retiring or permanently incapacitated, you may be exempt from CGT upon the sale of your business assets. This allows for a tax-free sale under these specific conditions. 50% Active Asset Reduction:
This concession permits a 50% reduction in the capital gain on active business assets. When combined with the general 50% CGT discount for assets held longer than a year, it can result in a 75% reduction of the capital gain.
Retirement Exemption:
Eligible individuals can access a lifetime limit of up to $500,000 in CGT exemptions when selling business assets. If under 55, the exempt amount must be paid into a complying superannuation fund or retirement savings account.
Rollover Relief:
This allows deferral of all or part of a capital gain for two years, providing flexibility to acquire replacement assets or make necessary business decisions without immediate tax implications.
Eligibility Criteria:
To qualify for these concessions, you must meet specific conditions:
Small Business Entity Test: Your business must have an aggregated annual turnover of less than $2 million.
Net Asset Test: The total net value of your CGT assets, including those of related entities, should not exceed $6 million. Personal assets like your home and superannuation balances are generally excluded from this calculation.
How ActOn Wealth Can Assist:
At ActOn Wealth, we understand the complexities involved in selling a small business and the importance of effective tax planning. Our services include:
Personalized Assessment: We evaluate your eligibility for various CGT concessions, considering your unique business structure and financial situation.
Strategic Planning: Our team develops tailored strategies to maximize available concessions, ensuring you retain more of your hard-earned wealth.
Superannuation Integration: We provide guidance on contributing proceeds from the sale into superannuation, enhancing your retirement savings in a tax-effective manner.
Compliance and Documentation: Our experts assist with the necessary documentation and ensure compliance with all relevant tax laws, providing peace of mind throughout the process.
Engaging with ActOn Wealth ensures that you receive comprehensive advice tailored to your circumstances, helping you navigate the complexities of CGT concessions and secure a financially sound future.
