It may sound counterintuitive, but sometimes reducing your tax bill as much as possible may actually reduce how much you can contribute to super.
The Issue:
Where business owners qualify for:
- Active asset reduction (50%)
- Retirement exemption ($500,000 lifetime)
…the active asset reduction may lower the remaining gain eligible for retirement exemption, which can reduce Lifetime CGT Cap contribution potential.
Strategic Tip:
If the post-discount gain is under $500,000, electing not to apply the voluntary active asset reduction may allow:
- Larger retirement exemption usage
- Greater super contribution under the Lifetime CGT Cap
Bottom Line:
Minimising tax and maximising super are not always the same strategy.
Considering Small Business CGT Concessions and Super Contributions?
The interaction between the active asset reduction, retirement exemption and Lifetime CGT Cap can be highly technical. In some situations, minimising immediate tax may reduce future super contribution opportunities.
Contact us here to discuss your business sale, CGT concessions and super contribution strategy.
Disclaimer and Warning
The information above is of a general nature only. It should not be used as a source to make financial decisions. It’s also important to note that the legislation and figures related to this topic tend to change regularly and therefore the information above may not reflect the current status. We recommend that if you are looking for advice on this matter, you should contact us.