Why Exit Planning Should Start Years Before You Sell
There is an old saying in business: it is not what you make that matters most, it is what you keep.
That becomes very real when you sell a business.
A buyer may agree to pay a strong price. The deal may look good on paper. But until tax, structure, timing, superannuation, and capital gains tax are properly considered, you do not really know what the sale means for your future.
And with governments changing tax rules, budgets shifting, and legislation moving over time, relying on “what the rules are today” can be a risky way to plan your future.
That is why smart business sale planning should start three to five years before you intend to sell …
Not because anyone can perfectly predict what a future Treasurer might do, but because early planning gives you more options.
The real issue is not just today’s tax law
Many business owners only think about capital gains tax when a buyer appears.
By then, it may be too late to fix the structure, clean up ownership issues, improve eligibility for concessions, or make better use of superannuation strategies.
Australia currently has four small business CGT concessions: the 15-year exemption, 50% active asset reduction, retirement exemption, and small business rollover. These can reduce, disregard, or defer capital gains where the conditions are met.
But eligibility is not automatic.
The business, the owner, and the asset generally need to satisfy specific conditions, including the active asset test and either the small business entity test or the maximum net asset value test.
That is where specialist advice matters.
Why three to five years?
Why the long time frame from the start of planning to the finish of your transition?
Because some issues cannot be fixed at the last minute.
For example, the small business 15-year exemption generally requires continuous ownership of the CGT asset for at least 15 years, along with other conditions.
The retirement exemption has its own rules, including a lifetime limit and different treatment depending on age and superannuation requirements.
If ownership, business structure, asset use, trust arrangements, or related-party assets are not reviewed early enough, an owner may discover too late that they do not qualify for the outcome they expected.
And all those issues have not touched on what’s needed to make the business attractive and valuable to future buyers or investors … fixing those types of issues generally takes a long time to get right as well.
Budgets change.
Governments change.
But your plan should not go stale.
The recent Federal Budget shows why business owners should not treat tax planning as a one-off exercise.
The Government has announced proposed changes to the broader CGT discount rules from 1 July 2027, while also stating that the four small business CGT concessions will remain unchanged.
That is useful to know. But it is not a reason to be complacent.
– Tax law can change.
– Your business value can change.
– Your asset position can change.
– Your retirement plans can change.
– Your eligibility can change.
That is why the best approach is not simply to get advice once and put it in a drawer.
The better approach is to build a sale-readiness plan, then keep the advice current as your business and the rules evolve.
Going concern does not mean CGT-free
Another common misunderstanding is the sale of a business as a “going concern”.
A going concern sale may be GST-free if the required conditions are met, but that does not mean the sale is free from Capital Gains Tax.
The ATO treats the going concern issue as a GST matter, not as a general CGT exemption.
This is another reason owners need proper advice before signing a sale contract.
The message for small business owners
Do not wait until someone offers to buy your business.
By then, the tax tail may already be wagging the dog.
Start three to five years out.
Check your structure.
Check your eligibility.
Check your asset position.
Check your superannuation options.
Check whether your business is actually sale-ready.
Then keep checking.
Because beating “Dr Grim’s tax grab” is not about clever last-minute tricks.
It is about giving yourself enough time to protect your options, strengthen your position, and keep more of the reward you spent years building.
P.S. The more conversations I have with business owners, one constant theme stands out: business owners are not just looking for better business advice.
They are looking for more clarity, less pressure, stronger options, and a business that supports the life they actually want.
That thinking is shaping a big evolution happening behind the scenes at Boyer Business Advisory over the next couple of months.
More on that big announcement soon.
Best regards,
Greg
The information in this article is general in nature and is provided for educational purposes only. It does not constitute legal, tax, financial or professional advice. Business owners should seek advice from appropriately qualified professionals regarding their specific circumstances.
Any examples used are for illustrative purposes only. Names and situations may be fictional and are used simply to demonstrate common scenarios faced by business owners.
