Business owners overlooking super boost

Making use of tax concessions like capital gains tax (CGT) measures while restructuring could be valuable in boosting superannuation balances, according to HLB Mann Judd. 

By failing to utilise available tax concessions, business owners could be missing out on valuable measures that could boost their superannuation balances.

Many owners weren’t reviewing their existing business structure in today’s economic climate, and therefore missing out on “substantial” tax savings, according to Peter Bembrick, tax partner at HLB Mann Judd Sydney.

“What’s a good structure and how do I get there? How can I restructure if needed? These are questions that too few business owners ask themselves,” Mr Bembrick said.

“However, if you identify the right structure early enough, the tax savings can be substantial and business owners are also better positioned for a possible exit.”

Tax concessions like capital gains tax (CGT) measures could be used when restructuring which would direct savings into super balances.

The CGT concession applied to owners aged 55 and over who were retiring or permanently incapacitated, and businesses with active assets that had been continuously owned for 15 years.   

Bembrick added: “Unfortunately, it would be quite a low proportion of business owners who are sufficiently aware of these concessions. 

“Not only does this concession provide a complete tax exemption, it also allows a business owner to exit and contribute more into superannuation on top of the standard contribution limits – remembering that super is a very tax effective place to have your money.”

In terms of eligibility of CGT concessions, meeting the maximum net asset value test (the total net value of the business owner and connected entities) remained most critical. The cap was currently $6 million or less. Two notable exceptions to this remained existing super balances and the family home. 

“If you know what concessions exist and whether you’re eligible, you can take advantage of them. 

“Sometimes you can do a restructure and use the concession to ensure the restructure is tax-free, although it is of course important to remember that there are a wide range of financial and commercial reasons for undertaking a restructure, which should not be purely tax driven,” Bembrick noted.