There are many taxation issues that need to be considered when selling a business.  There is no magic formula either, it's a case of understanding what is being sold (the business assets, or the shares in the business), what the contract says, timing of the sale, etc.  There are some key points though that can be big money-savers, but they need to be part of the negotiations, not an afterthought, and agreed before the contract is signed.

Asset Values

Agree the total value of assets being sold – stock, plant, office equipment, goodwill, etc.  The purchaser always wants more on these (to claim depreciation or a deduction where available) but the vendor must pay tax on recouped depreciation.

Avoid attributing set values to each class of assets in the contract.  Each party can attribute their own value to those assets based on their reasonable apportionment of the total transaction.  This allows each party some flexibility to optimise their respective tax positions.

Contract Date

For capital gains tax (CGT), the sale takes its timing from the contract date, not the settlement.  So, if you delay signing the contract from June to July it will defer any CGT or tax payable for 22 months, rather than 10 months.

Pay Accrued Leave

Usually this cost is adjusted at settlement against the sale proceeds, which reduces the CGT.  If the payment is made by the seller to the employee it will be tax-deductible.  The income tax benefit is likely to be greater than a CGT saving.

However, if the payment is made not to the employee but you are selling your entity to the purchaser so it is continuing with the employees (and so the leave liabilities take their timing from the original employment start date), the payment may no longer qualify as an accrued leave transfer payment.

Tax Losses

Tax losses attach to the entity that incurred the losses so the purchaser must purchase the shares in the entity.  There are conditions in the loss recoupment rules that must be satisfied for the losses to be available to the purchaser.

If the purchaser is reluctant to purchase the entity, which means he takes over the historical trading risks of the business (tax, super liabilities, unpaid group tax, unpaid suppliers, etc), you could perhaps offer warranties in the contract for a finite future term to provide indemnity to the purchaser.

GST

Under the 'supply of a going concern' GST-free option, if you sell everything that is necessary for the purchaser to continue the operations, it is likely the business sale will not attract GST.  However, this can be complicated so the sale needs to be structured to enable the vendor to access the exemption (see an accountant and solicitor before signing the contract).

It is always advisable to incorporate a GST recovery clause in the contract so you can recover GST from the purchaser if the tax office decides for whatever reason that the exemption was not available.

CGT and Small Business Concessions

The most common concession  is the 50% general Discount, halving the capital gain as long as the asset has been held by an individual or trust for at least 12 months before a sale (this one is not available to a company).

The small business CGT concessions have the potential to substantially reduce or even eliminate the CGT, but there are strict conditions.  To start, Aggregated Turnover (of a group) must be less than $2m and aggregated net asset value under $6m, but excluding the main residence and superannuation benefits.

Special rules apply with equity in companies and trusts, which are complex and prescriptive.  The ATO checks most claims to access the Concessions, so they need to be correctly applied.  While a Company may use some of the Concessions, when these profits are paid out to the shareholders they are treated as an unfranked dividend (so a company can end up paying full tax on a sale).

The sale of a business may seem reasonably straight forward, but this may not be the case when the detail is carefully examined.  In particular, all draft contracts and agreements should be reviewed before signing to ensure you legally minimise your tax liability and maximise the return on your efforts in building the business for sale.