Capital Gains
4. Capital Gains Tax Planning
Last updated: 01 Jul 2015
- It is essential to obtain specialist legal advice both when setting up your company as well as in managing your ongoing tax obligations to ensure:
- you have the most effective structure in place from the beginning; and
- that you continue to keep abreast of changes to tax law.
- Tax planning (not tax avoidance) involves questions of managing the tax burden of your business. When setting up your business it is essential you understand:
- what your tax obligations will be; and
- how to manage the requirement to document various aspects of your business for tax purposes.
- CGT planning requires you to consider a number of areas of law including company and partnership laws, laws relating to trusts and taxation laws.
- CGT laws may come from many sources including:
- legislation;
- taxation rulings and determinations of the ATO;
- ATO publications;
- Federal and High Court decisions; and
- Administrative Appeals Tribunal decisions.
- Some key concepts in small business CGT concessions also require a full understanding of the expected outcomes if you have for example ‘affiliates’ and ‘connected entities’ of your business. This requires specialist knowledge not only of tax law but also of commercial law.
- Good business structuring is essential to ensure that when you retire or stop being fully involved with the business the goodwill you have created and your business assets such as land and buildings do not result in unexpected and adverse tax consequences.
- It is critical to ensure you have the best advice since business structuring may be challenged as being for the purpose of tax avoidance rather than for tax planning. The consequences can be costly and time consuming. For this reason it is strongly recommended that a second opinion be obtained.
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