Selling your accounting practice can come with several tax consequences. Understanding these implications can help you structure the sale to minimise your tax liabilities and maximise financial benefits.
1. Capital Gains Tax (CGT)
In Australia, selling your business assets may trigger Capital Gains Tax. If you have owned your firm for over 12 months, you may be eligible for a 50% CGT discount on the gain.
2. Small Business CGT Concessions
If your firm qualifies as a small business (under $2 million in turnover), you may be eligible for CGT concessions, including:
- 15-year exemption (if you are retiring and meet the criteria)
- 50% active asset reduction
- Retirement exemption
- Rollover relief
3. GST on Business Sale
If selling the business as a going concern, you may be able to apply a GST exemption, provided certain conditions are met.
4. Employee Entitlements and Payroll Tax
If the buyer is taking over employees, there may be tax obligations related to accrued leave, superannuation, and payroll tax.
5. Goodwill and Intangible Assets
The sale price may include goodwill, client lists, and brand reputation. How these are valued can impact your tax obligations.
Final Thoughts
Before selling your accounting practice, consult a tax professional to explore available tax concessions and ensure compliance with Australian tax laws. Proper planning can help reduce your tax burden and maximise your after-tax profit.