The combination of selling your small business and retiring can be a demanding and complex time in your life. This is where early planning and advice are very important.

Plan early
When you begin to plan your sale of your business early, you are more likely to gain value. The process of selling a business can take up much of your time, but so can the daily requirements of running your business. Trying to do too much of both at the same time can mean that you are inefficient with your time.

There is an array of things that may need to be addressed early on with the help of your accountant or solicitor. Important examples include:

• ensuring the financial accounts are in order

• obtaining a valuation of the business

• determining the potential tax implications if the business is sold

• considering whether the business should be restructured before the offer for sale, and

• preparing or amending the legal and/or other documentation to facilitate the sale.

Manage capital gains tax
When you sell your business, you may be eligible to claim certain capital gains tax (CGT) concessions. For instance, you may be able to disregard 100% of a capital gain made on the sale of your business if you:

• have owned the assets for a continuous period of 15 years or more

• are at least 55 years of age, and

• are disposing of the asset for retirement purposes or are permanently incapacitated.

On the other hand, if you don’t fulfil the above conditions, there are other concessions that you may be permitted to use that could decrease or remove any taxable capital gain on the sale of your business.

You should check with a registered tax agent to establish the CGT implications, whether the small business concessions will be accessible to you and which ones should be claimed.


Maximise super contributions
Using most of the profits from your business to service debt and/or fund the next growth stage is quite normal. If this is something that you have done then this means you may not have been able to make further contributions to your super. Luckily, following from the sale of your business, there are plans that you may be able to make use of to get some or all of the sale proceeds into super and generate a tax-effective income to cover your living expenses in retirement.

Depending on your circumstances, you could potentially contribute up to $1.445m[1] from the sale of your business into super in 2017/18. Furthermore,, the money won’t count towards the concessional or non-concessional contribution caps that would ordinarily be relevant when contributing to super.

A financial adviser is your best option to help you maximise your super contributions using your sale proceeds. They can liaise with your accountant to determine which small business CGT concessions will be claimed and help devise a contribution plan that takes advantage of the available contribution caps.

Address other advice issues

While increasing your super would be a top priority, there are a few other issues you may need to address when it comes to selling your business and planning for retirement. For example, you may need to:

• decide where to invest sale proceeds that can’t (or shouldn’t) be put in super

• unwind or reassign business insurance policies, such as those used to fund a Buy Sell agreement

• pay-off business loans and release guarantees

• deal with business property that may (or may not) have been held in a self-managed super fund

• review your personal insurance needs to ensure you are suitably covered, and

• facilitate, with legal advice from your solicitor, any changes that may need to be made to your estate planning.

 [1] Source: Australian Taxation Office



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