Home' Border Enterprise : Enterprise Spring-Summer 2009 Contents SELLING YOUR BUSINESS
Just as Australia's population is ageing, the average age of small
business owners is also increasing. If a business owner wants to
produce the maximum amount of cash when they sell their business
they must study the tax implications and plan well in advance
reach Age pension age. This means if you
rolled over all of the proceeds from the
sale of your business into a super fund
none of it would be counted by Centrelink
until you reach 65. Once you turn 65 the
value of your superannuation will then be
counted as an asset by Centrelink. If you
receive an account based pension from
your super fund, after a deduction for the
purchase price of the super pension, the
net amount received would be counted
under the income test.
Q. What is a capital asset?
A. A capital asset is generally an asset
which is retained by an enterprise for the
purpose of ear ning revenue. A capital
asset is not intended for sale in the
ordinary course of business.
Capital assets include things like motor
vehicles, manufacturing machinery,
office equipment or land and buildings.
Q. When don't I account for GST on
disposal of a capital asset?
Q. I am over 55 years old and planning
to sell our small business and retire. I
am not sure of which is the best way to
minimise personal income tax on the
retirement exemption amount under the
small business CGT concession.
Do I report the retirement exemption
amount as an ETP and pay tax at 15
per cent or do I rollover the ETP into a
If I rollover the retirement exemption
amount into a superfund how will
Centrelink treat this superfund amount
under the income and the asset tests?
A. If you qualify for the small business
retirement exemption you will pay no
tax up to a maximum lifetime limit of
$500,000. Had you been under retirement
age, 55 in your case, you would have
been forced to rollover the retirement
exemption component into a super fund
to get the tax exemption. Once a person
reaches retirement age they can take the
retirement exemption in cash.
Given the reduced limits for deductible
concessional contributions, and the limit
on non-concessional contributions, you
may get the best result by rolling over the
retirement exemption into a super fund.
If you make a capital gain on the sale of
your business as an individual, after the
general exemption and the active asset
exemption, only 25 per cent of the gain is
counted for the retirement exemption.
Centrelink does not include the value
of a person's superannuation until they
A. Generally, you don't have to account
for GST when you dispose of a capital
asset if the asset is:
● Not a business asset, for example,
your family car that has not been used in
● Part of a business sold as a GST-free
going concer n;
● Residential premises, for example a
block of residential apartments. This does
not apply to new residential premises or
commercial premises, or
● Farm land. The land must be land
on which a farming business has been
carried on for at least the five years before
the disposal, and the purchaser must
intend that the land will continue to be
used for a far ming business.
Sources: Sydney Mor ning Herald and the
Australian Tax Office.
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