The sale of property, shares or a business represents a significant moment in time. Often the gain that is now realized has been accumulated over many years – and the tax attached to that transaction can be very significant.
Capital gains tax advice is incredibly important – not only because of the size potential tax liability but also because of the exciting range of capital gains tax concessions available to businesses and to families. And the law surrounding the capital gains tax concessions and rollovers is also one of the most complicated areas of tax law in Australia.
When we help families in business structure their business or investment affairs’ we always consider the long-term capital gains tax outcomes. In particular, the application of different CGT strategies for small business CGT concessions can vary depending on how it best suits a family, including the 15-year concession, small business reduction, CGT retirement concession, or replacement asset concession. And the main residence exemption on the sale of the family home (especially for mobile families) is always top of mind.
And if you are looking at an employee share scheme, corporate reconstruction or divestment of a business unit you can be sure that capital gains tax, and capital gains tax concessions, will apply to that transaction. And getting smart advice can help take your business to the next level.
We often use capital gains tax calculators to give a practical overview and understanding of the tax law advice on capital gains tax rollovers and the potential application of the small business CGT relief provisions. And we can actively work with how capital gains tax concessions can work tax effectively with contributions to superannuation funds (or an SMSF where relevant). So CGT advice coupled with a CGT calculation can distil the complexity of the transaction down to a single outcome and compare that to a position where no advice was produced.
For families moving to Australia the capital gains tax law on changing tax residency is a unique moment in time. And as capital gains tax can apply to an Australian tax resident on worldwide tax assets and only applies to a non-resident dealing with an Australian CGT asset – getting the VGT point in time when your tax residency changes in critical. So, a clear understanding of some families as to whether Australian capital gains tax is relevant as a tax position is a more important step than considering tax rollovers or tax relief.
In some instances, family assets are held for a long time, so the focus is to correctly record an asset’s purchase price (or CGT cost base) for future reference for estate and succession planning – especially for assets like holiday homes and vacant land. And this can be done by a CGT asset register or through clear ongoing financial reports and records.
If you are looking for capital gains tax advice, you should engage Westcourt because: