Colin & Christina
Selling a Small Business Tax-Free
About the Client
Colin and Christina are a couple in their mid-60s who spent over 30 years building and running a hairdressing business. They owned both the business itself and the physical shop premises from which it operated. Their entire working lives had gone into the business.
The problem: like so many small business owners in Australia, superannuation had barely featured. Every spare dollar went back into the business. By the time they came to us, retirement was imminent — but their financial position outside the business was almost non-existent.
The Problem They Came In With
Colin and Christina had been contemplating retirement for a few years but couldn’t see a clear path. Their instinct was to lease the shop to a new tenant and use the rental income to fund their retirement. On the surface, this seemed sensible — passive income, keep the asset, stay involved.
But the numbers told a different story. The rental income would have been taxable personal income to both of them. After tax, the net yield on the property was modest. There was no lump sum to invest. No ability to get capital working for them in a tax-effective environment. And they’d remain tied to the property indefinitely — responsible for maintenance, tenants, rates, and insurance — long into what should have been a carefree retirement.
What they didn’t know — and this is extraordinarily common among Australian small business owners — was that the tax system had been specifically designed to help people in exactly their situation. They had spent decades building something. The Small Business CGT concessions exist
to reward that.
What We Built Together
01
Confirmed Eligibility
Colin and Christina had owned the business and the commercial property for over 30 years. Both were well over 55 and retiring. The business had turnover well within the small business threshold. Every condition for the 15-year exemption was met — for both the business goodwill and the shop premises.
02
Structured the Sale
We worked with their accountant and solicitor to structure the sale
of both the business and the property. The combined proceeds — business goodwill, client base,
equipment, and the physical shopfront — were treated as eligible small business assets. The entire
capital gain on both was disregarded under the 15-year exemption. Their tax bill on the sale: zero.
03
Got the Proceeds into Super
Rather than sitting in a bank account attracting tax on
interest, the sale proceeds were contributed into superannuation using the CGT cap contribution.
This allowed a significant lump sum — well above the normal contribution limits — to enter a tax
environment where earnings are taxed at just 15%, and ultimately zero in pension phase.
04
Rolled the Account-Based Pension Phase
Once the funds were inside super, we rolled both of their accounts into account-based pensions. From age 60, all earnings and withdrawals from an account-based pension are completely tax-free. The investment portfolio inside the pension was structured to generate a reliable income stream aligned to their living expenses — comfortably funded, fully tax-free.
05
Invested in Income & Growth
The pension portfolios were invested across a diversified mix of growth and income assets, designed to sustain withdrawals over a 25+ year retirement while preserving capital where possible. Regular pension payments are now automatically deposited into their bank account every fortnight — like a tax-free salary that arrives without them lifting a finger.
High-Level Client Stats
0%
Capital Gains Tax Paid
On the full business & property sale.
0%
Tax on Pension Income
Completely tax-free from age 60.
30+
Years They Built It
Rewarded by the tax system.
| Key Result | Outcome |
|---|---|
| CGT on business sale | $0 — 15-year small business exemption applied in full |
| CGT on property sale | $0 — commercial premises also eligible as active business asset |
| Super contribution method | CGT cap contribution — outside normal concessional/non-concessional caps |
| Tax on super earnings | 15% in accumulation — immediately better than personal marginal rate |
| Tax on pension income | 0% from age 60 — completely tax-free income stream |
| Alternative rental income scenario | Taxable at personal marginal rate, no lump sum invested, tied to property |
| Retirement outcome | Comfortable, fully-funded, tax-free income. Clean exit. |
Compare this to the alternative Colin and Christina had been considering. Leasing the shop would have produced taxable rental income — modest after expenses, fully assessable, and still tied to all the responsibilities of property ownership. There would have been no lump sum to invest. No opportunity to access the tax-free environment of superannuation pension phase. No clean break. Instead, by understanding and using the tax rules that exist specifically for small business owners like them, Colin and Christina walked away from 30 years of hard work with exactly what they deserved: financial freedom, a tax-free income they can’t outlive, and a retirement built on their terms.
Important Note for Small Business Owners
The Small Business CGT concessions are among the most powerful — and most underused — provisions in the Australian tax system. Many small business owners retire without ever knowing they existed, or leave it too late to structure their affairs to qualify.
If you own a small business and are thinking about retirement in the next 5–10 years, the time to plan is now — not the year you want to sell. Eligibility conditions, asset structuring, and timing all matter. The difference between planning ahead and not can be hundreds of thousands of dollars.
This case study contains general information only. The Small Business CGT concessions are complex and eligibility must be assessed on individual circumstances by a qualified tax adviser.
Important: These case studies are based on real client scenarios with names and identifying details changed for privacy. They are provided for illustrative purposes and contain general information only. Past investment performance is not a guarantee of future returns. Seek personalised professional advice before making financial decisions.