If you’re a business owner, transferring ownership or exiting the business is a major life event. While operational handover is important, tax planning and holistic succession planning are often what determines how much wealth is preserved in your family.
Small Business CGT Concessions
The Australian tax system provides several valuable CGT concessions for small business owners . These can reduce or eliminate CGT on business sales, whether sold to a related or unrelated party. Key concessions include:
15-year exemption:
If your business has been owned for at least 15 years and you are aged 55 or over and retiring, you may be able to sell all or part of the business tax-free.
Retirement exemption:
The retirement exemption provides a lifetime CGT reduction of up to $500,000 per individual on the sale of a qualifying business asset. For those under 55, the exempt amount must be contributed into superannuation, allowing business owners to grow their super balance beyond the usual contributions caps, even if they have otherwise maxed out their overall super balance. For individuals aged 55 or over, contributing the exempt amount to super is optional, offering greater flexibility in how sale proceeds are managed.
Both the 15-year exemption and retirement exemption allow business sale proceeds to be contributed into superannuation, subject to specific eligibility rules. Proper planning and advice are essential to access these concessions and maximise their benefits.
Staged Succession
Staged succession allows ownership to be transferred over time rather than all at once. This approach offers several benefits:
- It can spread out taxable events, potentially allowing each stage to make better use of available concessions.
- It provides an opportunity to mentor the next generation, supporting a smoother operational and cultural transition within the business.
- Staged succession also helps families align business transition with broader goals, such as intergenerational wealth transfer and business continuity.
Integrating Business Succession with Wider Estate Planning
Good advice can turn succession from a tax problem into a strategic opportunity. For families looking to pass on personal wealth beyond the business, many of the same planning principles apply, especially those relating to trusts, timing of asset sales, and ongoing review of family and business structures.
It’s especially important to consider how business interests fit into your total estate. For example, succession and wealth transfer strategies often include establishing family or testamentary trusts , reviewing superannuation nominations, and planning for equitable inheritance between children and other beneficiaries.
Regular review of your succession and estate plan helps ensure all strategies remain aligned with your goals and the latest tax rules.
Considering Succession or a Business Exit?
At BlueRock, we understand the challenges and opportunities of business transition. Our specialist advisors can guide you through every step of your succession journey and help protect your wealth and legacy. Whether you’re planning an immediate exit or a longer-term, staged handover, contact us via the form below for tailored, practical advice.
Disclaimer:
The content is intended as general information only and should not be considered as advice on any matter and should not be relied upon as such. This has been prepared without taking into account any individual objectives, financial situation or needs. You should therefore consider the appropriateness of the information in regard to these factors before acting or seek advice before making any financial decisions. Blue Rock Investments (Melb) Pty Ltd is the holder of an Australian Financial Services Licence (AFSL No: 335588).
