These days, it's easy to start up more than one business, or to acquire more than 10% of the shares in a business. If the business is based in Australia, you'll be paying over more CGT soon as a non-resident. But locally, SARS lets you make a huge CGT saving if you operate lots of small businesses! Here's how...
Doing business in Australia?
If you're not a resident, you'll be liable for more capital gains tax
soon, as the current 50% CGT
discount for temporary and non-residents will soon fall away and only apply to residents, says MoneyManagement.
Here's what to worry about if you have a stake in a company based in Australia
So if your business has interest in taxable Australian property like real property situated in Australia, certain mining assets and indirect interests in these assets, like holdings of at least 10% in a land-rich entity, you'll soon be coughing up more to the Australian tax authorities.
But it gets worse.
From 1 July, the tax rate on capital gain for non-residents will be adjusted to make way for an increase to 33% from 1 July 2015, says Emirates247.
This is proof that Australia has one of the highest capital gain tax rates around the world, and it's one of the few countries to set different conditions for non-residents.
But don't worry, as SARS offers some relief if you operate more than one small business locally.
Operate more than one small business locally? Don't miss out on this CGT saving, thanks to SARS…
It doesn't matter if it's as a sole proprietorship, a partnership interest or a direct interest of at least 10% in the equity.
Either way, you're entitled to include every one of your small businesses when you determine the CGT
amount that needs to be disregarded when you sell your business to retire.
The amount is R1.8 million of any capital gain made when you dispose of an active business asset of your small business in the 2013 tax year.
This is to provide relief to small business owners who've invested their resources in their businesses to build up retirement capital.
But there's an exception to this – the CGT
exclusion doesn't apply if the total market value of all those assets across the businesses exceeds R10 million.
So don't even think of attempting to claim more than the amount you're entitled to, as SARS maintains records of exemptions already allowed to you and will judge your transgressions harshly, says The Practical Tax Loose Leaf
It's a great way to lower your overall tax burden when you retire.