Reviewed by Patrick Sargent CA, Registered Tax Agent 25758613·Published 2 August 2026 · Last reviewed 2 August 2026·6 min read
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Asset sale versus share sale
The negotiation underneath the negotiation
Asset sale (business sold out of the entity)
Share sale (the entity itself sold)
Buyer wants
This. Fresh depreciation cost bases, write-offs on eligible items, and no inherited skeletons, because tax history, unlodged periods and disputes stay with you
Rarely. They inherit the company's entire history
Seller wants
Less. Gains are taxed inside the entity first, where a company gets no CGT discount, then extracted with a second tax layer
This. One capital gains event at shareholder level, with the 50% discount and the small business concessions, and a clean exit
The bridge
Price. The structure gap is worth real percentages, so it gets traded rather than assumed
An apportionment schedule across goodwill, plant, stock and restraints that both sides' tax positions live with. Negotiate it line by line
The negotiation underneath the negotiation
Sole traders and trusts sell assets by definition, and generally exit better than companies, because the discount and concessions flow straight to individuals. Goodwill, usually the biggest line, is a classic active asset and prime concession territory whoever sells it.
The concession stack on sale day
Confirm the gateways just before contract. The $6 million net asset test is measured then, and late-career asset growth silently disqualifies people.
Apply the general discount, the 50% active asset reduction, and the retirement exemption or rollover as the numbers dictate.
Mind the contract-date rule: the gain belongs to the year you sign, not the year you settle, with the tax landing through a return nobody withheld for.
Handle earnouts under the look-through rules, which adjust the original gain as amounts are received.
The rest of the checklist
That last point puts the lodgment catch-up in sale preparation, twelve months out, alongside the structure review that decides whether any of the concessions above are still yours to claim.
Frequently asked questions
How is the sale of a business taxed?
As capital gains tax on the gain, covering goodwill and assets above cost base, with the 50% discount and the small business CGT concessions frequently reducing it dramatically or to nil.
Should I sell the assets or the shares?
Sellers prefer shares for one discounted, concession-eligible capital gains event. Buyers prefer assets for fresh cost bases and no inherited history. The gap is bridged in price and in the apportionment schedule.
Is GST payable on a business sale?
Not if it qualifies as a going concern: the whole operating business, both parties GST-registered, agreed in writing.
When is the tax payable?
Through the return for the year the contract was signed, not settlement, with earnouts adjusting under the look-through rules as they are received.
When should sale tax planning start?
Years out for structure and eligibility gateways, and twelve months out at minimum for the lodgment clean-up, apportionment strategy and concession confirmation.
General information only - not personal tax, financial or legal advice. Consider your own circumstances or speak to a registered tax agent. Remission of penalties or interest and payment plans are decisions of the ATO and outcomes can't be guaranteed.
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