SME owners urged to consider benefits of tax-efficient exits
A small business can achieve a smooth tax-efficient exit if it reduces tax liabilities with proactive planning and professional guidance, a tax expert has said.
Small business owners looking to sell their businesses are being urged to effectively plan their exit so a smooth and efficient tax exit can be achieved with limited tax liabilities.
HLB Mann Judd Sydney tax partner, Peter Bardos, said SME owners needed to act early by engaging tax advisers so that small business capital gains tax (CGT) concession and tax rollovers could be maximised.
According to Bardos, these concessions provided effective tax-saving opportunities but accessing them required thorough preparation and planning in advance.
“Small business CGT concessions and tax rollovers are highly valuable tools for business owners, allowing them to minimise or defer tax on a sale,” he said.
“However, these benefits come with strict eligibility requirements, which businesses can quickly outgrow.”
“Tax advisers play a crucial role in helping small businesses navigate these rules, assess their exit readiness and implement strategies to ensure tax concessions are fully utilised.”
It was suggested that tax rollovers, such as the small business restructure rollover, could be a viable and sensible option for SME owners.
This was attributed to the fact that the small business restructure rollover allowed businesses to restructure or defer capital gains which improved a business’s efficiency and appeal to future buyers.
The small business CGT concessions would also provide opportunities to reduce or eliminate tax on the sale of assets, such as goodwill or shares, Bardos said.
Three concessions SME owners could utilise included a 50 per cent reduction in capital gains for qualifying assets, a 15-year exemption on gains for businesses held for over 15 years and a tax-free treatment of up to $500,000 of gains where processes are contributed to superannuation.
Bardos said SME owners needed to grasp that tax advisers were key to identifying these concession opportunities and guiding businesses through the complexities of restructuring and tax planning.
“A tax adviser’s role is to help business owners get their affairs in order well before a sale. This includes reviewing the business structure, ensuring compliance with tax obligations, and addressing any ‘time bombs’ - like unresolved fringe benefits tax or shareholder loans - that could derail the process,” he said.
“Early engagement with an adviser ensures businesses are ‘exit-ready’ and positioned to deliver the best after-tax outcome. Leaving it too late can mean missing out on concessions or creating unnecessary risks for buyers, which can ultimately reduce the sale price.”
Bardos encouraged small business owners to seek professional tax advice early to evaluate their structure, maximise available concessions and address any outstanding tax issues.
“With the right preparation, small businesses can ensure a smoother, more tax-effective sale that benefits both sellers and buyers.”
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