Q: During the traumatic Lismore floods in February 2022, our family business in a building with two residential rental flats above the shop, and a detached studio out the back with flood storage, were severely damaged and we were trapped and had to be rescued. We are now negotiating a buyback of the building with the NSW Reconstruction Authority for $600,000, inclusive of GST and a separate sale of the GST-registered business as a going concern for $100,000 plus GST.
To get things right, you will need professional advice about the GST, the small business CGT concessions and the ability to contribute the business sale proceeds into super.Your set of circumstances is complex, says Tony Negline, superannuation and financial services leader with Chartered Accountants Australia.and the ability to contribute the proceeds from the sale of your business and your commercial building into superannuation.
The fact that the building has been out of action because of the floods and that it will be demolished by the government agency are unlikely to be factors when it comes to any tax liability, although this can be confirmed through legal advice.Gough says that where you are still negotiating with the government agency, you may not have seen a contract for sale as they can be slow in coming.
Negline says that where the sale proceeds satisfy the small business tax concessions – such as being from a business that has been owned for more than 15 years, or an asset that has been active in a business for at least half that time – the proceeds can be contributed to super.