Tax Impact Analysis

Tax Impact Analysis

There is one person who has almost as big an interest in the sale of your business as you do – and that is the Tax Man.

The decision to sell all or part of your business, and head towards retirement (or other business challenges), is not an easy one.  This is due to a number of considerations, not the least, the emotional aspect of letting go of what you have worked so hard to create.

After you have worked through the emotional issues, the decision to sell, or to keep battling on for a few more years, often comes down to the cold hard reality of money – how much will I be left with to “live on” or “play with” after the dust has settled.

Unfortunately, the “market value” of your business (i.e. what someone will pay for it), is in most cases not a very accurate indication of how much cash you will be left with.  This is because the price paid by the buyer represents the “gross” inflow, out of which you will need to meet a number of liabilities.

The extent of liabilities you will be responsible for will to some extent depend on the deal that you are able to strike with the buyer.  However, the biggest impact on your final cash balance is likely to be tax.

The extent of tax payable on the sale of your business will depend on a number of factors.  These factors include:

  • The structure through which you carry on your business;
  • Whether the buyer is willing to buy your business vehicle or the underlying business assets (i.e. a “share sale” or “asset sale”);
  • The price you originally paid to acquire the business (or the assets making up the business);
  • The extent of “revenue” and “capital” assets in your business (i.e. stock and equipment v. goodwill and property);
  • Your ability to access any general CGT concessions;
  • Your ability to access the CGT small business concessions;
  • Your ability to qualify for any concessional termination or redundancy payments payments; and
  • Your ability to utilise superannuation planning strategies.

We are able to assist you (working with your accountant) in quantifying the likely Tax-Impact™ arising from the sale of your business.  This includes both the initial Tax-Impact when the business is first sold, as well as the overall final Tax-Impact when the proceeds from sale are finally distributed to you and your business structure has been wound-up.  Put simple we can help you work out how much cash-in-hand you will be left with.

We are also able to assist you:

  • Structure your business and investments to give you the best shot at minimising the Tax-Impact on an eventual sale of your business; and
  • Prepare in advance for the sale or succession of your business – so that you are in control of the process, and the final “take-home” cash outcome.

For further information contact us on 1300 654 590 or by email.

 

The information contained in this post is current at the date of editing – 17 July 2024.

Our Great Lawyer Guarantee

We want to be part of your team over the long term. We'll achieve this by sticking closely to the following principles:

  • We'll listen carefully to understand what you want to achieve. Then we'll thoroughly explain our advice and step you through the documents. You can be sure you'll know the full consequences.
  • Our lawyers work as a team, so someone will always be available to answer your questions, or point you in the right direction. You will also benefit from a range of perspectives and experience.
  • One of our key goals is to pass on as much knowledge as we can, so you can make your own informed decisions. We want to make you truly independent.
  • We only do what we're good at. You can be confident that we know what we're doing and won't pass on the cost of our learning.
  • For advice and documents, we provide a fixed or capped quote so you don’t take price risk. If you're in a dispute, we'll map out the process and costs so you know what to expect.
  • We're not in this game for our egos. We're in it for a front row seat to witness your success.

We measure our success on how efficiently we have facilitated your objectives, enhanced your relationships, and reduced the level of stress for all involved.

If we sound like people you can work with, call us now on 1300 654 590 and speak directly with a great lawyer.

Subdividing the Family Property – Income or Capital? 

Subdividing the Family Property – Income or Capital? 

​​Subdividing your land is a great way to release money for other projects as the prices of Australian real estate continue to climb. However, the tax consequences of subdivision and development are complicated. Getting the details wrong could cost you up to 100% more tax than you would otherwise be required to pay.​  

read more
Should I hold my family home in a trust?

Should I hold my family home in a trust?

It is well understood by savvy property investors that holding investment properties in a trust can offer the benefits of asset protection, estate planning and tax efficiency. The next question is whether these benefits extend to the family home. In other words, is it worth holding your family home in a trust?

read more