The CAPITAL GAINS TAX concessions on selling a business or a business asset for a SME business owner are very compelling!
They include:
- The 50% general CGT Discount for owning an asset for more than a year
- The 50% active asset reduction
- The CGT Retirement Exemption (you don’t have to retire)
- The 15 year exemption
Here’s a quick example:
John, now 45, originally started a business together with his partner with setup costs of $10,000 in 2009. They sold it in 2015, 6 years later for $1,000,000.
A capital gain of $990,000 on the sale or $495,00 for John’s 50%; John will reduce the gain in half by the general discount and half again by the active asset reduction and can put the rest in Super where it will not be taxed.
| Description | Tax $ | Cash $ |
| For John | ||
| Sale Proceeds | 495,000 | 495,000 |
| General Discount | 247,500 | |
| Net Gain | 247,500 | |
| Active Asset Reduction | 123,750 | |
| Net Gain | 123,750 | |
| Super Retirement Contribution | 123,750 | 123,750 |
| Taxable Income/Cash Remaining | – | 371,250 |
Note: to qualify for these concessions there are conditions; turnover is less than $2m or net assets of the taxpayer are less than $6m and the asset is an active asset. The small business concessions are complex and you should seek professional advice.
Contact David at our office if you require assistance or would like to discuss this further.