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Tax and the sale of a pre-CGT business

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Published on 01 Apr 16 by "TAXATION IN AUSTRALIA" JOURNAL ARTICLE

If a business commenced before the introduction of the CGT regime on 20 September 1985, this does not in itself mean that any capital gain from the disposal of the goodwill attached to that business will be disregarded. Similarly, a liquidation distribution representing the gain on the disposal of the goodwill of a pre-CGT business may not necessarily be a tax-free distribution.

This article considers the ways in which the capital gain from the disposal of goodwill of a pre-CGT business may be subject to taxation. In particular, this article provides guidance on how to manage the “essential nature or character” of a pre-CGT business, the application of Div 149 and CGT event K6 of Subdiv 104-K of the Income Tax Assessment Act 1997 (Cth), and the implications for pre-CGT goodwill under the various CGT roll-over provisions as relevant to both advisers and liquidators.

Author profiles

Dean Crossingham CTA
Dean has over a decade of experience providing tax advisory and compliance solutions. He advises on all areas of tax concerning private enterprise and family groups. Dean's expert yet pragmatic approach provides comfort and clarity to CABEL Tax clients. Dean is a member of Chartered Accountants Australia and New Zealand, and he also holds a Master of Applied Taxation from the University of New South Wales. - Current at 06 January 2016
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Kaylene Hubbard ATI
Kaylene Hubbard, ATI, is a Tax Partner with KPMG Enterprise and is the Managing Partner of KPMG’s office in Greater Western Sydney. Kaylene’s experience spans over 20 years in working with corporates, including ASX listed entities, private owners, family groups and their businesses across a wide range of industries to grow, create and protect value. Her expertise includes developing appropriate business structures and funding arrangements, capital management, mergers and acquisitions, business restructures and assisting clients in their dealings with the Australian Taxation Office. Kaylene has a deep interest and experience in the not-for-profit and charity sector. Kaylene has worked extensively with not-for-profit entities seeking to change their corporate and tax structure, and in pursuing tax exempt status for entities. She has experience in seeking charity status for organisations, in seeking Deductible Gift Recipient status and in advising not-for-profit entities regarding their governance and compliance obligations. Kaylene is passionate about empowering the sector to grow, impact and adapt in a changing environment. - Current at 03 February 2023
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