Business owners may be able to access the small business CGT concessions which can significantly reduce the CGT payable on the sale of a business.
Subject to certain eligibility criteria, the concessions available are the:
50% active asset reduction;
15 year exemption;
small business retirement exemption; and
small business rollover
How a business is structured also affects if and how these concessions may be utilised.
Individual sole trader and discretionary trusts provide the most effective access tot he small business CGT concessions, which coupled with the general 50% CGT discount, may lead to no tax being paid on the sale of a business.
Unit (or other fixed) trusts are not as tax effective as discretionary trusts, whilst companies can be the least favourable structure for CGT purposes.
Accessing the CGT small business concessions is only one factor to consider when structuring and it may be more important to consider ongoing tax minimisation and asset protection issues.
At KK Partners Group, we have assisted many of our clients to access and maximise the benefits of these concessions when selling their business.
We recommend business owners review their eligibility and impact of their current structures on the small business CGT concessions and consider restructuring if appropriate.