Typically when a Company sells its assets, it does not receive the 50% Capital Gains General Discount. This means that the owners of that company on receipt of funds from a business sale will normally pay the full capital gains tax. However, with the right business restructuring strategies and tax advice from Chan & Naylor, you may be able to legally reduce tax on business sale, thereby receive increased or improved cash from the sale of a business.
If you are the shareholder in a company selling assets, a liquidation of that company on completion of the sale transaction, may entitle you to a 50% Capital Gains General Discount, whereas the company would not be entitled to this benefit.
Given the tight timetable for liquidation, the process of restructure should commence prior to the sale transaction being completed. It would be better however, to commence before starting the sale process.
The benefits are an increased after tax cash flow from the sale of a business from within a company. If the sale is for the shares in the company, then this restructure may not be necessary but traditionally buyers have been unwilling to take over a company for fear of any inherent liabilities or obligations that are within the company structure. Therefore, most buyers are advised to buy the business from the company, not the shares in the company.
For improved cash from the sale of a business – legally reduce Capital Gains Tax on sale of a business – talk to experienced capital gains tax accountants at Chan & Naylor.
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