ATO late lodgement penalty: up to $364 per 28 days, capped at $1,820 per document · interest 11.43% p.a. compounding daily · See how to remit them →
Asset sale versus share sale
| 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 |
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?
Should I sell the assets or the shares?
Is GST payable on a business sale?
When is the tax payable?
When should sale tax planning start?
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.