Small Business Restructure – Capital Gains Tax Roll-Over Relief
Sufficient asset protection, estate planning and tax planning all stems from having the correct business structure. Not only does your choice of business structure affect the safety of your personal assets and your tax position but it also impacts the continuity of the business upon change of ownership and what registration processes you will need to take.
Changing Business Structures
You’re not locked into any structure and you can change the structure as your business changes or grows.
On the 8th of March, the Tax Laws Amendment regarding small business restructure rollover was formally approved. The rollover provides:
- Flexibility for small business owners to change their legal business structure by permitting them to defer gains or losses that would otherwise be realised when business assets are moved from one entity to another.
- A new roll-over for gains and losses arising from the transfer of assets that are CGT assets, trading stock, revenue assets and/or depreciating assets between entities as part of a restructure of an ongoing business.
- Small businesses with an annual turnover of less than $2 million will be able to change their legal structure without attracting a capital gain tax (CGT) liability.
These changes will apply to transfers occurring on or after 1 July 2016.
The Government is also reducing the tax rate for more than 90 per cent of incorporated businesses with annual a turnover of less than $2 million. The company tax rate for these businesses will be reducing from 30 per cent to 28.5 per cent. This equates to a tax saving of 1.5%.
In other words, if you decide to restructure from a sole trader to a company you will be able to minimise tax and protect your home and assets.
This is a fantastic window of opportunity to speak to a Success Accountant before 30th June to review your business structure to ensure that it is the most tax effective and achieve optimum asset protection for your business. To obtain a free business structure review by our business structure experts get in touch today.
Source: https://www.ato.gov.au/General/New-legislation/In-detail/Direct-taxes/Income-tax-for-businesses/Small-Business—CGT-roll-over-relief-for-changes-to-entity-structure/
About Lan Nguyen
Lan is the Founder and Chief Strategist at Success Accounting Group, Melbourne based CA firm. In a matter of short 8 years she has built up a reputable Chartered accounting firm with 3 offices and a team of 6 professional accountants and support team members. Her mission is to provide Innovative and Strategic Financial advice to help her customers make smarter financial decisions today for a brighter future.
Success Accounting Group is for established business owners who would like help to grow a sustained business. As a business owner you understand what drives your business success with our accounting team taking care of the rest.
Success and Wealth
Success Accounting Group Pty Ltd
Oakleigh, VIC, 3166
