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Selling your small business?

You want to make the most from the sale of your business — but navigating the tax system can be tough on your own. When it comes to turning your business assets into retirement savings, there are a number of Capital Gains Tax (CGT) concessions to help you along the way. Here’s what you need to know.

15-year exemption

Are you aged over 55 and have owned your business for more than 15 years? The good news is, if you’re selling your business because you want to retire or are permanently incapacitated and meet the relevant conditions, then you won’t need to pay tax on the amount you make from the sale of your business. You can put the amount, up to $1.355m, towards your super as a contribution outside of the non-concessional cap — 100% tax-free.

Early retirement

Thinking ahead about your retirement? If you’re aged under 55 but want to invest the proceeds of your business sale into your retirement savings, you can. As long as you put the ‘retirement exemption’ amount of your capital gain into a super fund, you won’t pay any tax on this money. There is a $500,000 lifetime cap on these concessions — so you can either claim all of this on the sale of one business, or use it on multiple business sales until you reach the limit.

50% reduction

You can claim a reduction of 50% on your capital gain. This is on top of the 50% general CGT discount available to individuals — meaning you only pay tax on 25% of the capital gain from the sale of your business. You can choose not to apply this concession – so make sure you make the choice that gives you the best overall outcome.[1]

Rollover to a new business

Planning to buy a new business? You can choose to roll over some or all of the capital gain from the sale of your old business into the purchase of your new one.[2]

[1] The use of the 50% active asset exemption is not conditional upon not claiming the other concessions, it is optional.

[2] If the amount rolled over was less than the relevant part of the capital gain then the retirement concession could be applied.


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