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Future Savings - Succession planning for the small business |
If a taxpayer sells shares in a business, or bequeaths them on death, normal capital gains tax rules apply. However, if it is shares in one's own business, or the business itself, which is being disposed of, small business relief may be available. |
If small business relief is available, in addition to the normal 50 per cent capital gains tax discount, a taxpayer might be entitled to a further 50 per cent 'active asset' discount, a further retirement exemption, and rollover relief where the proceeds of sale of the asset are used to acquire other active assets. |
Small business relief is available where a taxpayer, or related entities or persons, owns $5 million or less of business assets, and the asset being disposed of is an 'active asset'. If the asset is a share of a company, a person must have a controlling interest - that is, broadly speaking, own 50 per cent or more of the shares in that company - before it will be deemed an active asset. |
There is also a 15-year ownership exemption from capital gains tax if the asset has been owned by the taxpayer for at least 15 years, the taxpayer is over 55, and the disposal happens as a consequence of their retirement or death. Contact your solicitor if you would like further information on tax planning your business future. |
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