Selling or closing your business - things to consider

The Tax Office offers business owners an overview of tax related issues that may need to be addressed prior to the sale or closing of a business.

It is emphasised by the Tax Office that the guide is not exhaustive, but seeks to be a starting point for recurring topics pertinent to the sale or closing of a business, including:

• Goods and services tax (GST);
• Capital gains tax (CGT);
• Superannuation;
• Winding up a company;
• Record keeping and lodgment obligations; and
• Cancelling registrations.

The guide notes that GST implications may arise following the disposal of capital assets and business owners should familiarise themselves with the treatment of such transactions.

The Tax Office highlights the availability of various CGT concessions to small business owners and the appropriate application of the concessions may minimise CGT liabilities when selling a business.

Business owners may still be required to complete an activity statement for the tax period in which their registration is cancelled. PAYG instalment obligations may still exist until the date of business cessation and instalment activity statements may be received even after cancellation of the Australian business number (ABN).

Lastly, the Tax Office has developed a structured checklist to assist business owners in meeting their requisite tax obligations when selling or closing their business.

Click here to access the guide.

Common payroll tax errors

The Department of Finance commented that its Compliance Division undertakes audits and investigations to ensure that employers liable for pay-roll tax adhere to legal requirements prescribed by the Pay-roll Tax legislation.

 Such examination serves to recognise common pay-roll tax errors made by employers, including:

• Failing to register when total liable wages exceed the Western Australia threshold of $750,000 per annum;
   
• Failing to declare fringe benefits and benefits under employee share schemes;
   
• Failing to include all liable wages such as director's fees and superannuation;
   
• Incorrect claiming of an exemption for certain wages;
   
• Incorrect classification of employees as contractors; and
   
• Late lodgment of monthly or annual returns
   

Penalties will result if a taxpayer:

• Fails to register as and when required;
• Fails to lodge returns and payments on time;
• Underpays tax due;
• Understates wages in returns; or
• Provides false or misleading information.

Lastly, the Department of Finance states that taxpayers who voluntarily declare a liability may obtain substantially lower penalties in comparison to those who do not.