When selling a business, many owners automatically assume they should claim every available tax concession.
However, that isn’t always the strategy that produces the best retirement outcome.
One example involves the Active Asset Reduction.
Bigger Tax Saving Doesn’t Always Mean Better
The Active Asset Reduction can reduce a capital gain by 50%.
While that sounds attractive, there is an important catch.
Amounts reduced under this concession cannot later be contributed under the Lifetime CGT Cap.
In some cases, electing not to use this concession allows more of the gain to qualify under the Small Business Retirement Exemption, increasing the amount that can ultimately be contributed to super.
Why Planning Matters
The right strategy depends on:
- the size of your capital gain
- which CGT concessions you qualify for
- your retirement goals
- your existing super balance.
This is one reason why tax planning and retirement planning should never happen in isolation.
A well-planned strategy may significantly improve your retirement savings while still delivering an effective tax outcome.
Speak to Us Before You Sell
The decisions you make before signing a sale contract can have a lasting impact on both your tax position and your retirement savings.
At Forman Financial Services, we work alongside your accountant to help you evaluate the available CGT concessions and develop a strategy that supports your long-term retirement goals.
If you’re considering selling your business, contact us before the sale is finalised. Early planning may help you maximise your superannuation opportunities and avoid costly mistakes.
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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.