If your business has a turnover greater than $2 million then to qualify for the small business CGT concessions (and potentially pay no tax on your business sale) you need to pass the $6 million net assets test.
The net value of CGT assets includes assets owned by you, any entities 'connected with' you, any of your 'affiliates' and entities connected with your affiliates. Assets to be included in determining the net value of the CGT assets are not restricted to business assets. They include all CGT assets of the individual and entities, unless the assets are specifically excluded. The three main exclusions are the individual's main residence, superannuation, and any personal use assets
Strategies to reduce the net assets below the $6m threshold to access the small business CGT concessions include:
- Make extra contributions into super (deductible and non deductible contributions).
- nvest additional funds into the primary residence (through renovations and extensions).
- Payout the private mortgage.
- Purchase private use assets such as a boat or yacht.
- Reduce the net business assets through a share buyback and contribute the funds into super or the primary residence.