Selling a business is often the biggest financial event in an owner's life, and the tax on it is set mostly by decisions made years earlier. Who owns the shares. Whether the premises sit inside the trading company. Whether there's a loan from the company to you. How long you've held each asset. Get those right before you list, and the small business CGT concessions can do a lot of work. Leave them until the buyer's lawyer sends the contract, and they often can't be fixed.
This page explains what drives the tax, how the 1 July 2027 changes affect sellers, and how we run an exit with you.
How is the sale of a business taxed in Australia?
Mostly through capital gains tax. When you sell, you work out a capital gain on each asset or interest sold: the price allocated to it, less its cost base. Goodwill is usually the biggest gain, because it often has little or no cost base. Then discounts and concessions may reduce that gain.
What you pay depends on five things.
| Driver | Why it matters |
|---|---|
| What is sold | An asset sale (the company or trust sells goodwill, plant and stock) taxes the gain in the entity. A share or unit sale taxes the owners directly. |
| Who owns it | Individuals and trusts have had the 50% CGT discount. Companies never have. That changes where the gain is best taxed. |
| How long it's been owned | The discount needs more than 12 months; the 15-year exemption needs 15 years. |
| Whether the concessions apply | Turnover or net asset tests, the active asset test, and extra tests for shares and trust interests. |
| When the contract is signed | The contract date, not settlement, sets the income year. From 1 July 2027 the CGT discount rules change. |
Our guide to tax on selling a business covers the mechanics in more depth. This page is about planning them.
What are the small business CGT concessions?
Four concessions that can reduce or remove the capital gain on active business assets. You first have to pass the basic conditions:
- Size: you're a CGT small business entity with aggregated turnover under $2 million, or the net value of your CGT assets (plus connected entities and affiliates) is $6 million or less, just before the sale. These limits are not indexed.
- Active asset test: the asset was used in a business (yours, or a connected entity's or affiliate's) for at least half the time you owned it, or at least 7.5 years if you owned it for more than 15 years.
- Shares or trust interests: extra conditions apply, including having significant individuals who own at least 20% directly or indirectly.
Then:
| Concession | What it does | Key conditions |
|---|---|---|
| 15-year exemption | Removes the whole gain | Owned 15 years; you're 55 or over and retiring, or permanently incapacitated |
| 50% active asset reduction | Halves the gain (after the general discount) | Basic conditions only |
| Retirement exemption | Exempts up to $500,000 per person, lifetime | Under 55: the amount must be paid into super |
| Rollover | Defers the gain | Buy a replacement active asset or improve one, generally within two years |
Amounts from the 15-year and retirement exemptions can be contributed to super under the CGT cap ($1,935,000 for 2026–27) rather than the usual contribution caps. Whether and how to contribute is a financial product decision for a licensed adviser; we work out the tax and the eligible amounts. Full details are in our guide to the small business CGT concessions.
A worked example
Example (hypothetical, rounded, contract signed before 30 June 2027): Say a 58-year-old physiotherapist has run a clinic as a sole trader for 12 years. The clinic's turnover is under $2 million. She sells the business for $1.3 million, of which $1.2 million is a capital gain on goodwill.
| Step | Gain remaining |
|---|---|
| Capital gain | $1,200,000 |
| 50% general CGT discount | $600,000 |
| 50% active asset reduction | $300,000 |
| Retirement exemption (she's over 55, so no super contribution is required) | $0 |
She uses $300,000 of her $500,000 lifetime retirement limit. She hasn't owned the business for 15 years, so the 15-year exemption isn't available. Change one fact, such as the business being in a company with her as a 15% shareholder, and the answer changes completely. That's why we model your actual structure.
How do the 1 July 2027 changes affect selling a business?
This is law. Under the Treasury Laws Amendment (Tax Reform No. 1) Act 2026:
- From 1 July 2027, the 50% CGT discount for individuals, trusts and partnerships is replaced by indexation of the cost base for growth that accrues from that date.
- Assets held on 30 June 2027 are treated as sold and reacquired at that point for this purpose. Growth up to 30 June 2027 keeps the 50% discount, and you can later choose between an actual 30 June 2027 market value and a statutory apportionment method when you sell (the apportionment formula is still to be set by legislative instrument).
- A 30% minimum tax applies to certain capital gains of resident individuals that accrue from 1 July 2027.
- The small business CGT concessions are retained. For the 50% active asset reduction only, the turnover limit widens from $2 million to $10 million from the income year that includes 1 July 2027. The $6 million net asset value test, the $500,000 retirement limit and the other $2 million tests are unchanged.
What that means in practice:
| Your situation | Our usual starting view |
|---|---|
| Sale likely in the next 8 months, buyer ready | A contract signed by 30 June 2027 is taxed entirely under the current rules. Model it, but don't rush a bad deal to beat a date |
| Sale likely in 1 to 5 years | Growth to 30 June 2027 keeps the discount either way. Get a defensible 30 June 2027 valuation of the business |
| Turnover between $2 million and $10 million, net assets over $6 million | The wider active asset reduction from 2027–28 may help a later sale. Model both timings |
| Business in your personal name with real risk, sale years away | Consider whether restructuring before 30 June 2027 is worth it; see business restructuring |
| Company sells assets, then distributes to you | Companies never had the discount, so the company-level tax is unchanged; the owner-level outcome may change. Model it |
The bigger picture is in our guide to CGT discount changes in 2027.
This is not law. The Tax Reform No. 3 Bill 2026 proposes a 30% minimum tax on discretionary trust income from 1 July 2028. If your business sits in a family trust, we'll show you the result under current law and under the Bill, but we won't restructure on a Bill alone.
What should you fix before selling?
The work that adds the most value, in rough order of lead time.
| Fix | Why | Lead time |
|---|---|---|
| Structure: who owns the shares, units or business | Concessions depend on it; changing it later can trigger tax and duty | 1 to 3 years |
| Premises and other passive assets held separately | Buyers often don't want them; they can fail the net asset or active asset tests | 1 to 2 years |
| Division 7A loans and unpaid trust entitlements | Must be cleared or dealt with; a share buyer will insist | 6 to 12 months |
| Clean, timely financial statements and monthly reports | Buyers pay more for numbers they trust | 12 months of history |
| Owner dependency | Key clients and staff who only deal with you reduce the price | 1 to 2 years |
| Employee entitlements, awards and super | Underpayments surface in due diligence and come off the price | 3 to 6 months |
| Tax lodgements and ATO debts | A buyer's due diligence will find them | 3 months |
| Leases, licences and contracts | Assignment and change-of-control clauses can stall a deal | 3 to 6 months |
Our fractional CFO plan is often the vehicle for this: monthly reporting, a forecast, and the clean-up done during the year so the business is ready when the buyer is.
How do earn-outs, deferred payments and vendor finance affect tax?
Many sales aren't paid in one lump sum.
- Earn-outs link part of the price to future performance. Where the arrangement qualifies as a look-through earn-out right (broadly: an arm's length sale of an active asset, with payments ending within five years after the end of the income year of the sale), the earn-out payments are treated as part of the sale price as they're received, and the gain is adjusted. Where it doesn't qualify, the tax treatment can be much less favourable.
- Deferred instalments of a fixed price are generally taxed in the year of the contract, not when the money arrives. Make sure there's cash to pay the tax.
- Vendor finance means you lend part of the price to the buyer. The interest is income; the risk is that the buyer doesn't pay.
- Restraints of trade and consultancy agreements should be priced and documented separately, because they can be taxed differently from goodwill.
We review the draft contract with your solicitor so the price allocation, GST clauses, earn-out terms and warranties match the tax plan.
How does selling a business work with BPAG?
- Free strategy call. We talk about the business, the likely buyer, timing and what you want afterwards. If an exit is years away, the advice is still useful now.
- Tax and structure review. We map who owns what, test the small business concession conditions and estimate the tax on an asset sale versus a share sale. Our CGT agent works through the discount, the concessions and the 2027 transition; our Division 7A agent checks loan accounts. A qualified accountant reviews every number.
- Pre-sale plan. A written list of fixes, owners and dates. Restructures that need legal documents are briefed to your solicitor.
- Valuation evidence. For a 30 June 2027 market value or a family sale, we coordinate a qualified valuer and assemble the evidence.
- Vendor due diligence. We prepare the financial information pack a buyer will ask for, normalise the earnings and answer the buyer's accountant.
- Contract and settlement. We work with your solicitor on price allocation, GST, employee entitlements and earn-outs, then prepare the tax returns that record the sale.
- After the sale. Super contributions (with your licensed adviser), the final returns, and what to do with the proceeds.
BPAG runs on Nagaris. Its agents draft the calculations and documents; qualified accountants review and sign off, and nothing goes to you, a buyer or the ATO without a person approving it.
"I started using BPAG 3 years ago and they have been advising my business and myself in an extraordinary way. The team is also caring and they listen to what your needs are." Christian Luis Barbeitos Alvarez, Google review
What does it cost?
Exit planning and sale work is quoted as a fixed fee before we start, based on your structure and how far off the sale is. Clients on our Fractional CFO plan (from $499 per week + GST) have proactive annual tax planning included, which is where the long lead-time work happens. See our pricing page.
An honest point: for a small sale with a simple structure, where the concessions clearly apply, the tax work can be straightforward. Spend your money on a good business broker and solicitor. We'll tell you if that's your situation.
What should you send us?
- Three years of financial statements and tax returns for every entity in the group
- A structure chart, or a list of who owns which shares, units and assets
- Trust deeds, company constitutions and any shareholder agreements
- Dates and costs of acquiring the business, premises and major assets
- Loan account balances between you, the company and any trust
- Leases and key customer and supplier contracts
- Any offer, heads of agreement, or broker's appraisal
- Your plans for after the sale
If you're on the other side of the table, see our buying a business service.
Frequently asked questions
Do I pay GST when I sell my business?
Usually not, if the sale qualifies as a GST-free supply of a going concern. That requires the buyer to be registered for GST, the seller to supply everything needed to keep the business running, the business to keep operating until the day of sale, and both parties to agree in writing that it's a going concern sale. If any condition fails, GST may be payable on the price.
How long before selling should I talk to an accountant?
Ideally two to three years. Several of the things that drive the tax, such as how long you've owned assets, whether they've been actively used, who owns the shares, and loans between you and the company, take time to put right. Even six months helps. A week before signing, the options are few.
Is it better to sell shares or assets?
For the seller, a share sale is often better for tax because the CGT discount and concessions can apply at the owner level, and liabilities stay with the company. Buyers often prefer assets, because they get a fresh start and a higher depreciable cost base. The answer depends on your structure, the buyer and the price, so we model both.
Can I sell my business to my children?
Yes, but the ATO treats a sale between family members at market value, whatever price you actually agree. That means you need a proper valuation, and the small business CGT concessions are tested on the market value. We can model a staged handover, vendor finance or a structure change as alternatives.
What happens to my employees' entitlements when I sell?
On an asset sale, employees who move to the buyer may have their service and leave balances recognised by the buyer, or you may pay them out, depending on the contract and the Fair Work rules. On a share sale, the employer doesn't change, so entitlements stay with the company. Either way the amounts should be calculated and agreed in the contract.
Will the 30% minimum tax apply to my business sale?
The 30% minimum tax applies to certain capital gains of resident individuals that accrue from 1 July 2027. Growth up to 30 June 2027 is outside it. How it interacts with the small business concessions and your other income depends on your circumstances, so we model it for each sale rather than assume.
Official sources
General information only, current as at 18 October 2026. It is not personal tax, legal or financial product advice and doesn't take your circumstances into account. Talk to us before you act. Where a recommendation needs a licensed financial adviser or a solicitor, we work alongside them.