Homework Help is Here – Start Your Trial Now!
Business
Business Law
Sarah, an Australian resident and sole trader,  has operated her business, Sarah’s Creative Design, for the past 12 years. The business provides interior design services and has grown significantly over the years. Sarah is now planning to retire and sell her business. She owns several business assets that she is considering selling, and she wants to know whether she qualifies for the small business capital gains tax (CGT) concessions under Australian taxation law. The details of Sarah’s business assets and situation are as follows: Business Sale: Sarah has found a buyer for her business who is willing to pay $900,000 for the business, which includes $300,000 for goodwill and $600,000 for her business premises. The sale is expected to generate a capital gain of $400,000 for Sarah. She wants to know if she qualifies for the small business CGT concessions to reduce the amount of tax she has to pay on this capital gain. Business Premises: Sarah purchased the business premises 8 years ago for $200,000. It is now worth $600,000, and the sale of the premises will generate a capital gain of $400,000. Sarah has used the premises solely for business purposes throughout her ownership. She wants to know if she can apply the small business CGT concessions to reduce her capital gain on the sale of the premises. Retirement Planning: Sarah is 58 years old and intends to retire after selling her business. She plans to contribute some of the proceeds from the sale into her superannuation fund to prepare for retirement. She is interested in understanding whether any of the CGT concessions might allow her to contribute to her superannuation fund without incurring tax. Turnover: Sarah’s business has had an annual turnover of $1.7 million over the past three financial years. Required 1. Advise Sarah on whether she qualifies for the small business CGT concessions and how she can use these concessions to reduce any capital gains tax liability resulting from the above transactions. 2. How will Sarah’s retirement and superannuation plans impact the application of the CGT concessions? 3. What is the optimal tax strategy for Sarah in light of the small business CGT concessions? In your analysis, cite relevant provisions of Australian taxation law, ATO rulings, and case law where applicable. Provide detailed recommendations on how Sarah should structure the sale and apply the small business CGT concessions to minimise her tax liability.

Sarah, an Australian resident and sole trader,  has operated her business, Sarah’s Creative Design, for the past 12 years. The business provides interior design services and has grown significantly over the years. Sarah is now planning to retire and sell her business. She owns several business assets that she is considering selling, and she wants to know whether she qualifies for the small business capital gains tax (CGT) concessions under Australian taxation law. The details of Sarah’s business assets and situation are as follows: Business Sale: Sarah has found a buyer for her business who is willing to pay $900,000 for the business, which includes $300,000 for goodwill and $600,000 for her business premises. The sale is expected to generate a capital gain of $400,000 for Sarah. She wants to know if she qualifies for the small business CGT concessions to reduce the amount of tax she has to pay on this capital gain. Business Premises: Sarah purchased the business premises 8 years ago for $200,000. It is now worth $600,000, and the sale of the premises will generate a capital gain of $400,000. Sarah has used the premises solely for business purposes throughout her ownership. She wants to know if she can apply the small business CGT concessions to reduce her capital gain on the sale of the premises. Retirement Planning: Sarah is 58 years old and intends to retire after selling her business. She plans to contribute some of the proceeds from the sale into her superannuation fund to prepare for retirement. She is interested in understanding whether any of the CGT concessions might allow her to contribute to her superannuation fund without incurring tax. Turnover: Sarah’s business has had an annual turnover of $1.7 million over the past three financial years. Required 1. Advise Sarah on whether she qualifies for the small business CGT concessions and how she can use these concessions to reduce any capital gains tax liability resulting from the above transactions. 2. How will Sarah’s retirement and superannuation plans impact the application of the CGT concessions? 3. What is the optimal tax strategy for Sarah in light of the small business CGT concessions? In your analysis, cite relevant provisions of Australian taxation law, ATO rulings, and case law where applicable. Provide detailed recommendations on how Sarah should structure the sale and apply the small business CGT concessions to minimise her tax liability.

icon
Related questions
Question

Sarah, an Australian resident and sole trader,  has operated her business, Sarah’s Creative Design, for the past 12 years. The business provides interior design services and has grown significantly over the years. Sarah is now planning to retire and sell her business. She owns several business assets that she is considering selling, and she wants to know whether she qualifies for the small business capital gains tax (CGT) concessions under Australian taxation law.

The details of Sarah’s business assets and situation are as follows:

  1. Business Sale: Sarah has found a buyer for her business who is willing to pay $900,000 for the business, which includes $300,000 for goodwill and $600,000 for her business premises. The sale is expected to generate a capital gain of $400,000 for Sarah. She wants to know if she qualifies for the small business CGT concessions to reduce the amount of tax she has to pay on this capital gain.
  2. Business Premises: Sarah purchased the business premises 8 years ago for $200,000. It is now worth $600,000, and the sale of the premises will generate a capital gain of $400,000. Sarah has used the premises solely for business purposes throughout her ownership. She wants to know if she can apply the small business CGT concessions to reduce her capital gain on the sale of the premises.
  3. Retirement Planning: Sarah is 58 years old and intends to retire after selling her business. She plans to contribute some of the proceeds from the sale into her superannuation fund to prepare for retirement. She is interested in understanding whether any of the CGT concessions might allow her to contribute to her superannuation fund without incurring tax.
  4. Turnover: Sarah’s business has had an annual turnover of $1.7 million over the past three financial years.

Required

1. Advise Sarah on whether she qualifies for the small business CGT concessions and how she can use these concessions to reduce any capital gains tax liability resulting from the above transactions.

2. How will Sarah’s retirement and superannuation plans impact the application of the CGT concessions?

3. What is the optimal tax strategy for Sarah in light of the small business CGT concessions?

In your analysis, cite relevant provisions of Australian taxation law, ATO rulings, and case law where applicable. Provide detailed recommendations on how Sarah should structure the sale and apply the small business CGT concessions to minimise her tax liability.

Expert Solution
steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer