MGS Private provides advice in relation to small business CGT restructures. These processes are essential when dealing with financial difficulties or changes in business circumstances. Here’s a concise overview:
- Small Business Restructure Roll-Over:
- Eligibility:
- You are eligible for this roll-over if:
- Your aggregated turnover is less than $10 million.
- You transfer active assets that are capital gains tax (CGT) assets, trading stock, revenue assets, or depreciating assets from one entity (the transferor) to one or more other entities (transferees).
- The transfer forms part of a genuine restructure of an ongoing business (not an artificial tax-driven scheme).
- The transaction does not result in a change to the ultimate economic ownership of transferred assets.
- Safe Harbour Rule: A safe harbour rule provides an alternative way to meet the genuine restructure requirement.
- Examples:
- No Change in Ultimate Economic Ownership: If you, as a sole trader, transfer assets to a trust where you remain the sole unit holder, there’s no change in ultimate economic ownership.
- Changed Share of Ownership: In a partnership transferring assets to a company, maintaining each individual’s share of ultimate economic ownership is crucial.
- Tax Implications:
- The roll-over allows you to transfer active assets without incurring an income tax liability.
- The CGT liability is deferred until eventual disposal.
Remember, small business CGT restructures provide flexibility while managing tax consequences. Seek professional advice for personalized guidance! Contact MGS Private for further details.
