Capital Gains Tax (CGT) 2016

Tax and the sale of a pre-CGT business

Source: Taxation In Australia Journal Article

Published Date: 1 Apr 2016


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.

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Capital Gains Tax (CGT) 2016

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