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Business Sales May Have Huge Impact On Super

Small business owners who are planning on selling their business or business assets and using the proceeds towards superannuation free of capital gains tax (CGT) need to ensure they are aware of the recent changes to concessional and non-concessional caps.

Despite the small business CGT cap rules not being changed recently, such a move could have huge impact on your overall superannuation position.

In general, the small business CGT cap allows the capital earned on the sale of any small business asset up to $500,000 per taxpayer to be contributed to superannuation free of CGT or in case of the assets that had been held for more than 15 years the threshold would rise to $1.415 million for the 2016/17 financial year.

Clients need to be aware that once this tax-free contribution is placed in an Self-Managed Super Fund using the CGT cap, these contributions will be counted as part of a member’s total superannuation account and are assessed accordingly in terms of eligibility for catch-up concessional contributions.

Despite the small business CGT cap being left alone by the recent legislation changes, small business owners need to carefully assess the impact of making such a contribution on the sale of a business or business asset.

As part of our discussions with clients, any small business contribution should be made after any other contribution, especially when the small business CGT contribution will push account balances over the various account thresholds.

It is very important for any small business owners to ensure they receive advice before acting on any changes, to ensure you maximise your options in these circumstances.

Should you have any questions in regards to the above, please don’t hesitate to contact an Intralink adviser.

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