Arguably the most valuable taxation concessions available to small businesses are the Small Business Capital Gains Tax (CGT) Concessions. The small business CGT concessions aimed to improve CGT relief available to small businesses to assist in the funding of business expansion as well provide for retirement.
There are four CGT concessions for small business which can apply to CGT events. These are:
(1) the small business 15-year exemption
(2) the small business 50% reduction
(3) the small business retirement exemption, and
(4) the small business roll-over.
To qualify for the concessions, taxpayers must satisfy a number of basic conditions. Further additional conditions also apply to some of the concessions
Since their introduction, the concessions have been subject to a number of major reviews by the Board of Taxation and subsequent legislative amendment. Although these reviews have sought to simplify the operation of the small business CGT concessions, taxpayers and practitioners alike are currently faced with a myriad of extremely complex and definitional based rules which are a challenge to apply and interpret.
Whilst taxation is obviously only one factor to consider when deciding if and / or when to dispose of a business, it is important to seek specialist advice from a qualified tax professional to understand the likely taxation consequences from the business sale and available CGT concessions (including the associated eligibility conditions and obligations).
Adopting some simple strategies prior to selling your business can facilitate access to CGT concessions that may be otherwise unavailable, resulting in substantial tax savings.
If you are considering selling your business, or have recently sold your business, Armada Accountants & Advisors are here to help!