Adam, 1. Any form of capital gain receives the 50% capital gains tax reduction regardless of form (shares, investment property, private company etc)
2. In addition to this there is a further 50% small business capital gains tax reduction provided that your individual share of the proceeds of the sale + any assets you own excluding your home (and ? super) are less than $6m. If you own 50% of a business that sells for say $10m, you are still within the $6m limit since your share is only $5m. 3. Taking into account points 1and 2 above, if for example the proceeds of sale of your shares is $2m, to calculate the tax liability, reduce the $2m by 50% for the standard capital gains tax exemption, leaving $1m, reduce the $1m by 50% for for the small business capital gains tax exemption, leaving $500k, then pay income tax on the $500k in that year, circa 42%, net tax payable is circa $210k. Selling a business within the small business capital gains tax exemption thus provides you with income taxed at circa 11%, legitimately. 4. You can further reduce the capital gains tax liability by rolling some of the proceeds of the sale into your superannuation, or, if you roll the entire proceeds of the sale into another company for your next venture there is $0 tax payable at the time but obviously future personal tax liabilities if/when you take the money out of that company. As Jeromy Evans pointed out, if your shareholding is owned via a discretionary trust such as a family trust you can further control how the income is distributed and again reduce the tax liability. To me, trusts are a difficult one for most startups to justify though, you generally need to set them up at the time you're starting the business, if you're a startup in IT you're quite often young, without family, and with varying degrees of confidence that you're startup will ever result in the million dollar exit. It's always easy in hindsight to say you should have created a trust structure but there's most often more urgent things to spend the few thousand in trust establishment fees on at the time (like food, rent etc). Hope this helps, I'm not a lawyer or an accountant but I think you will find the above holds fairly true if you do get it validated. Quite certain that the ATO website will confirm this also with a bit of reading. Andrew Rogers On 08/10/2011, at 4:09 PM, Adam Rands wrote: > Hey guys > > I'm interested to learn about any *legitimate* share holding or > selling structures people have used to minimize or avoid Capital Gains > Tax when selling their company. > > Hoping people are willing to share their experiences... > > Best > > - Adam > > -- > You received this message because you are subscribed to the Silicon Beach > Australia mailing list. Vist http://siliconbeachaustralia.org for more > > Forum rules > 1) No lurkers! It is expected that you introduce yourself. > 2) No jobs postings. You can use http://siliconbeachaustralia.org/jobs > > > To post to this group, send email to > silicon-beach-australia@googlegroups.com > To unsubscribe from this group, send email to > silicon-beach-australia+unsubscr...@googlegroups.com > For more options, visit this group at > http://groups.google.com/group/silicon-beach-australia?hl=en?hl=en -- Andrew Rogers - Managing Director Hosting ruminations : http://anchor.com.au/blog We did the thinking for you : http://anchor.com.au/wiki Anchor Systems Pty Ltd - Hosting Heavyweights Level 1, 230 Clarence Street, Sydney NSW 2000 andrew.rog...@anchor.com.au - http://www.anchor.com.au Phone: 1300 883 979 - Direct: 02 8296 5100 - Fax: 8296 5199 -- You received this message because you are subscribed to the Silicon Beach Australia mailing list. Vist http://siliconbeachaustralia.org for more Forum rules 1) No lurkers! It is expected that you introduce yourself. 2) No jobs postings. You can use http://siliconbeachaustralia.org/jobs To post to this group, send email to silicon-beach-australia@googlegroups.com To unsubscribe from this group, send email to silicon-beach-australia+unsubscr...@googlegroups.com For more options, visit this group at http://groups.google.com/group/silicon-beach-australia?hl=en?hl=en
