A unique business sale, with a unique outcome
Lately, we’ve been working on a variety of interesting projects that fall out of your typical day at the office. Most recently, overseeing the sale of a business that operates within a company structure. Let us explain.
The company up for sale owned the commercial property in which it occupied. However, the purchaser didn’t include the property as part of the sale. You’d assume that you’d include all assets sans the property in the sale, right? However this company had certain licences in place that weren’t readily transferable. What did we have to include as part of the sale? Shares within the company.
Our mission (and we chose to accept it), was to separate the property and the company without having to pay capital gains tax and stamp duty.
How did we do it?
Firstly, we set up a holding company between shareholders and the company up for sale. We then applied the relevant capital gains tax and stamp duty relief as part of the transaction.
Secondly, we consolidated the two companies for general tax purposes, allowing us to move the property asset from the company up for sale to this new holding company. By doing this, we avoided triggering the capital gains tax and stamp duty. And, as an added bonus, it allowed us to move franking credits as, well, a nice little extra for the original company owners.
The outcome? The shares of the company up for sale can now be sold and the property retained.
What are some of the key takeaways?
It’s worth noting that we presented a pretty simplified version of what happened. As you can imagine, there was criteria to meet and plenty of procedural requirements that needed to be observed. Here are the two main points that we took away from this unique sale situation:
- Always seek and take professional advice on who should own any significant assets when purchasing a business.
- Even if you have a thorough understanding of tax and stamp duty laws, it’s still worth engaging a professional – communicate your desired outcome, and we’ll do everything we can to get you there.
Are you sale-ready?
If you’re considering a unique sale proposition either as a buyer or seller, and require expert advice or guidance, then reach out to the BridgePoint Group team today.
We’d love to help. Experienced in all facets of business improvement.
Call 1300 656 141