At some stage in the future, it is inevitable that you will be exiting the franchise. Here are some key tax structures and considerations to discuss with your accountant when selling your franchise:
1. Capital Gains Tax (CGT):
The sale of a business in Australia is generally subject to CGT. However, there are various concessions and exemptions available, such as the 15-year exemption for small business owners.
2. Small Business CGT Concessions:
Eligible small businesses may benefit from concessions like the 50% active asset reduction, retirement exemption, and the 15-year exemption.
3. Asset Sale vs. Share Sale:
The structure of the sale (asset sale or share sale) can have different tax implications. Asset sales may trigger CGT on individual assets, while share sales may involve CGT at the entity level.
4. GST (Goods and Services Tax):
The sale of a business may be subject to GST. However, the sale of a going concern can be GST-free if specific conditions are met.
5. Stamp Duty:
Stamp duty may apply to the sale of certain assets, such as real property. Each Australian state and territory have its own stamp duty rules.
6. Superannuation (Retirement Savings):
Consideration should be given to any superannuation (retirement savings) implications, especially if the sale results in a significant financial gain.
7. Foreign Resident Withholding Tax:
If the seller is a foreign resident, there may be withholding tax obligations on the buyer. This applies to the sale of certain Australian assets, including real property.
8. Consultation with Tax Professionals:
Engage with tax professionals, such as accountants and tax advisors, to ensure compliance with Australian tax laws and to optimize the tax outcome of the sale.
9. Due Diligence on Tax History:
Buyers typically conduct due diligence on the tax history of the business. Sellers should ensure their tax records are accurate and up to date.
It’s crucial to seek professional advice from tax experts who are familiar with the tax system and relevant regulations. Tax laws can change, so staying informed about the latest developments is essential for making informed decisions.
Any questions about this reach out to our team.