Many SMSFs may still be unaware they qualify for small business capital gains tax (CGT) relief where the capital gains for the sale of their business can be directly contributed into their fund, a technical expert has said.
At the recent SMSF Association Technical Day Series in Sydney, SMSF Association head of technical Peter Hogan highlighted that with the limited ways of getting additional money into superannuation, this was an important concession for qualifying clients to use.
“There was an alarming statistic that I read a few years ago, which basically said while small businesses potentially have access to small business CGT relief, only one in 10 access it when they sell their business,” Hogan said.
“That is a worrying trend – people selling their businesses and not realising that they can shelter a substantial part of the capital gain that they have built up over time by putting a certain amount of those proceeds into superannuation.
“I don’t know whether that’s still the number and if there’s been any further analysis since that time, but it is an underutilised opportunity, especially now that it is one of the few opportunities to put extra amounts of money into super.”
He stipulated, however, it was vital to determine whether CGT relief is the end goal for the client versus maximising assets in the SMSF.
“Because what you do and how you approach it is quite different, depending on what the answer is from your client,” he said.
