As a hard-working small business owner you've spent years building your own livelihood and now, for whatever reason, you've decided the time has come to sell or close down your enterprise.
To assist you, the Australian Tax Office has a handy checklist on its website to enable you to tick off important legal and taxation matters you will need to address. You can find it here.
Many of the items listed are fairly straightforward so we have focused on clarifying those that could cause confusion.
Goods and services tax
Disposing of capital assets
If you are registered for GST, disposing of capital assets is a taxable sale and you are required to account for GST.
If you are selling real property, the margin scheme calculates the GST as being 1/11th of the difference between the sale price and the purchase price or approved valuation.
Sale of a going concern
A business sold as a going concern is generally exempt from GST however the ATO recommends you obtain a private ruling relating to your particular circumstances.
Capital gains tax
The sale of your business' assets may incur CGT if you sell them for more than their cost base.
Small business concessions
If you satisfy the definition of 'small business' for CGT purposes (currently net assets of $6 million or less) you may be eligible for:
· CGT exemption on assets owned continuously for at least 15 years;
· 50% capital gain reduction on active assets or total relief if you are retiring; and
· deferred capital gains for two years, or longer if you acquire a replacement asset.
If a price can't be agreed at sale time an 'earn-out agreement' allows payment of an initial lump sum with subsequent payments made based on the business' performance after sale. These payments are considered received in the year the sale occurred, often requiring the amendment of prior year tax returns.
If you own pre-CGT shares and the market value of your company's post-CGT assets are at least 75% of the net value of the company, the ATO may deem your shares to be post-CGT assets.
An agreement whereby the surviving business partners will buy out your interest in the business should you die, become disabled or retire. If the payout from a life insurance policy is used, the proceeds will be exempt from CGT.
Should you satisfy the 'small business' net asset threshold and the 15-year ownership CGT exemption you may be eligible to make a non-concessional contribution of your business sale proceeds into superannuation without affecting your non-concessional cap. A lifetime limit of $500,000 applies.
You must provide certain information to a super fund when rolling over an ETP consisting of a CGT-exempt component.
If your business forgives all or part of a debt owed by you as a shareholder or shareholder's associate, the debt may be treated as dividends under Division 7A. You can seek the Tax Commissioner's discretion in this area.
If selling your company as a number of separate entities your demerger may have CGT consequences.
Winding up a company
If your company pays a distribution to shareholders of money or property that has been derived from income and not paid up share capital, that distribution may be deemed to be dividends.
CGT provisions can be triggered when a company makes a final or interim distribution where the distribution is not deemed to be dividends.
If a liquidator has been appointed, it has an obligation to collect any debts owed to the ATO.
Finalising employee or independent contractor obligations
If your business has employees, including independent contractors, you will need to finalise matters relating to FBT, PAYG, superannuation and eligible termination payments for those employees.
The checklist is an excellent guide, but you should always seek professional advice regarding the legal and taxation matters involved and above all, retain all related documentation and records.
Sources:Read in full + comments 2 Comments
Are TV travel documentaries not close up and personal enough for you? Would you prefer to actually be there, immersing yourself in the environment, amongst the people, eating local delicacies, but you’re not sure if your budget can take you further than your lounge room?
An overseas holiday doesn't have to be outrageously expensive, especially if you follow these money saving tips. You may be surprised how far your money can take you.
Research your options
• Shop around. Go online and find the best deals without leaving your mouse. Seeking expert advice from a travel agent could also save you time.
• Consider a travel package which includes flights, accommodation and meals. Often packages are cheaper than purchasing each component individually.
• Choose a destination that doesn't have a big impact on your budget. South-east Asia, New Zealand and the South Pacific are cost-effective destinations for Australian travellers.
• Consider choosing a venue that offers free activities, such as an island resort.
Time your travel
• The weather doesn’t seem to follow the same patterns these days, so travelling off season may be a good option to save on flights and accommodation.
• Plan your trip well in advance and book early. The closer you get to your departure date, the more expensive travel costs are likely to be.
• School holidays coincide with higher costs, as well as bigger crowds. If you don’t have to travel with children, steer clear of these times.
Save money on flights
• Make the most of discounted flights but check terms and conditions carefully. Many “discount” airfares have “add-ons” such as paying for seat allocation and credit card surcharges which make the promoted fare much higher.
• Subscribe to the airlines’ “special deal” emails and act fast. There are restrictions on travel dates but the savings can be extraordinary if you’re flexible.
Be budget savvy with accommodation
• Check out discount travel websites. Type “discount travel” into your favourite search engine. The choice is astounding - but stick to the more well-known and reputable sites.
• Rent a fully-equipped holiday home or a serviced apartment rather than staying in a hotel.
• Consider staying several nights in one location to take advantage of discounted weekly rates or deals like “buy 5 nights, get 2 nights free”.
• Better still, arrange to house-sit or house-swap at your holiday destination and your accommodation could be free! There are many websites available offering these services.
With these money-saving tips, the most expensive thing you’ll do for your next overseas trip is updates your passport!Read in full + comments 1 Comments
A mismatch of results this week, with the US markets closing slightly in negative territory, Australia closing around 1% higher, and the London stock exchange having a very strong week, closing nearly 3% higher.
The potential for a higher US interest rate continues to cause unrest for investors.
The mining sector has been strong, and oil prices have risen significantly this week, so keep an eye on fuel prices.
Next week could potentially see significant market movement off the back of a lot of data being released – on Monday the ABS releases immigration figures, Tuesday it releases home loan figures, plus NAB releases it’s monthly “Business confidence” report, while ANZ release the weekly consumer confidence report. Wednesday we get to see the quarterly building activity from the ABS. On Friday the RBA releases the half yearly financial security review.
|Figures for 06/10/2016|
|Index||Index Old (Closed at)||Index New (Closed at)||% Change|
|All Ordinaries (Aus)||5,500||5,552||0.9%|
|Dow Jones (US):||18,339||18,281||-0.3%|
|Nikkei 225 (Japan):||16,705||16,819||0.7%|
|Hang Seng (Hong Kong):||23,762||23,788||0.1%|
|S&P 500 (US):||2,171||2,159||-0.6%|
|FTSE 100 (UK):||6,849||7,033||2.7%|
|Australian Dollar (US cents)||0.77||0.76||-1.0%|
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To coincide with our fresh face-lift at the offices of Hudson Financial Planning we are taking the opportunity to freshen up our approach to our Hudson Report - now called ebulletins. We have been randomly surveying our members regarding the content and the volume of ebulletins that we send out.
It has come to our attention that the general consensus is that our ebulletins would be better read if they came out monthly and written with more detail. So we have decided to enter into a new era at Hudson Financial Planning, diving into the world of social media and keeping our members updated through a range of different medium. Our ebulletins will come out monthly and will still contain the same content but with more articles and more detail. Throughout the month, we will keep our members updated through Facebook, Instagram, LinkedIn and Twitter and with a blog or two.
This is by no means a substitute for our ebulletins; and if you are not part of Facebook, Instagram, LinkedIn and Twitter, rest assured, you will still get all of the important information emailed to you through our blogs or the monthly ebulletins. Each financial planner at Hudson has now been allocated with their own family of members. This is another positive step forward for Hudson. There is one dedicated planner now for each member and as such you will have access to your planner through phone contact, Skype or email, for as many times as you need them. If you are unsure who your Hudson Financial Planner, is please call Wendy or Matt to find out.
We are excited about these small but significant changes and hope that we will get a lot of our members talking more about current affairs and financial matters over the coming months. The monthly ebulletins will kick off on the 26th October, and like us on Facebook for more fun tips throughout the month.Read in full + comments 3 Comments
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