Business legal guide
Business Sale Tax Considerations Australia
Selling business assets and selling shares are different transactions. CGT concessions and GST-free going-concern treatment each have eligibility conditions; a clause in the sale contract does not create eligibility.
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In short
Selling business assets and selling shares are different transactions. CGT concessions and GST-free going-concern treatment each have eligibility conditions; a clause in the sale contract does not create eligibility.
Content updated 25 October 2026 · Published by Envision Legal.
Asset sale versus share sale
An asset sale transfers identified business assets, potentially including goodwill, equipment, stock, contracts and intellectual property. A share sale transfers ownership interests in the entity operating the business; the company’s assets and liabilities remain with it. Both structures need transaction-specific legal and tax analysis.
Do not assume share sales always give sellers a better CGT outcome or asset sales always leave every liability behind. Employees, statutory liabilities, consents and transaction terms can change the result. See the ATO’s disposing of your business guidance.
Different assets can have different tax treatment
A business sale price may cover goodwill, trading stock, depreciating assets and other rights. Those components can have different tax consequences; not every dollar of proceeds is simply a capital gain. Agree an allocation supported by the transaction and obtain tax advice before settling the documents. Earn-outs, vendor finance and deferred payments need particular attention to timing and risk.
When is a going concern GST-free?
Section 38-325 of the GST Act provides conditional GST-free treatment. Broadly, the supply must be for consideration; the recipient must be registered or required to be registered for GST; and the parties must agree in writing that it is a supply of a going concern. The supplier must supply all things necessary for continued operation of the enterprise and carry it on until the day of supply.
A contract heading saying “going concern” does not cure a missing essential asset, licence or operational requirement. Review lease arrangements, contracts, premises and operational continuity. Read the ATO going-concern guide and GST Act section 38-325.
Small business CGT concessions are not automatic
The concessions can reduce, disregard or defer a capital gain where the conditions are met. The basic conditions include a relevant CGT event and gain, an eligible-entity pathway and the active-asset test. Turnover, net assets, connected entities and affiliates may matter. Individual concessions have further requirements, and shares or trust interests have additional conditions.
See the ATO’s eligibility overview and active-asset guidance. A small transaction price alone is not proof of eligibility.
What the sale documents need to address
- Assets or shares transferred and price allocation.
- GST treatment, registration confirmations and any going-concern obligations.
- Who bears liability if anticipated GST treatment fails.
- Pre-completion tax liabilities, warranties, disclosure and tax indemnities.
- Deferred payments, earn-outs, completion adjustments and security.
- Consents and continuity conditions required for completion.
Coordinate advice before heads of agreement
Ask your tax adviser to assess the proposed structure and concessions before signing binding terms. Envision Legal handles fixed-fee business-sale legal work and coordinates documents with your accountant or tax adviser; this guide is not personal tax advice. Buyers can start with business purchase legal advice and the acquisition checklist.
Frequently asked questions
Is selling shares always better for CGT?
No. The result depends on the parties, assets, eligibility conditions and transaction. Asset and share sales need separate legal and tax assessment.
Does a going-concern clause make a sale GST-free?
Not by itself. The requirements of GST Act section 38-325 must be met, including registration, written agreement, necessary operating assets and continued operation until supply.
Do all small businesses qualify for CGT concessions?
No. Basic eligibility, active-asset and concession-specific conditions apply, with additional rules for shares and trust interests. Obtain transaction-specific tax advice.
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