I am 60 years old and have run a successful business for many years. I would like to retire in the next year or so and sell my business at that time. Can I put the sale proceeds in super and, if so, how much can I contribute?
When you sell your business, you may be able to use a range of tax concessions to disregard some or all of any capital gains you make on the sale of your business and thereby reduce or eliminate your capital gains tax (CGT) bill.
When you receive the sale proceeds, you could contribute the money into super. However, there are caps on the amount you can contribute before penalty tax is payable, depending on the details of your business ownership.
One of these caps is known as the CGT cap and it is currently $1.255m, if you have owned your small business assets for a continuous period of at least 15 years and meet certain other conditions. If you don’t meet these requirements, the CGT cap is $500,000.
If you have any sale proceeds left over after utilising the CGT cap, you may be able to make further contributions by using what is called the ‘non-concessional contribution cap’. This cap is up to $450,000 in a single year, provided you meet certain requirements.
By utilising both the CGT and non-concessional contribution caps, you could contribute up to $1.705m into super in the year that you sell your business and then start a pension, which could pay you a tax-free income to meet your living expenses.
Where you currently engage a qualified accountant, we can work together with them to help you identify which CGT concessions you may be eligible for and then recommend a range of strategies to help you make the most of them. Alternatively, we can engage on your behalf a qualified tax specialist from our panel of expert service providers.
If you would like to know more about this strategy or how we work with accountants to implement these strategies please contact Mike Sikar on 02 9929 3343 [email protected]