How a regional business owner sold up, paid no capital gains tax, and retired tax-free.

For most business owners, the sale is the single largest financial event of their lives. Decades of reinvested profit, deferred income, and risk all crystallise into one transaction — and the difference between a well-structured exit and a rushed one is often measured in hundreds of thousands of dollars. This couple understood that instinctively. They came to us with a handshake deal already on the table, but no settled view on what to do with the proceeds.

Our clients — a husband and wife, both 61 — had built a specialist engineering and fabrication business across South West Victoria over 24 years. Like a lot of regional operators, they had ploughed nearly every spare dollar back into plant, premises, and people. The business was worth a great deal. Their superannuation, by contrast, was modest: they had spent their careers building an enterprise, not a super balance. A national group had offered $4.1 million for the business — goodwill, plant, equipment, and stock. The question wasn't whether to sell. It was how to keep as much of that $4.1 million working for them as possible.

The brief: don't let the tax tail wag the dog

When we worked through what the couple actually wanted — rather than what they assumed was unavoidable — three priorities emerged. First, they wanted to legally minimise the capital gains tax on the sale, which on a gain of this size could otherwise have run well into six figures. Second, they wanted the bulk of the proceeds invested somewhere they would generate income for the next 30 years, not sit in a term deposit being eroded by inflation and tax. And third — the part that mattered most to them — they wanted a retirement income they could rely on completely, without having to think about tax returns or franking credits every year.

That last point is the one most owners underestimate. The sale gets all the attention, but the sale is a single day. The 30 years that follow are what the money actually has to do. Structuring the exit well is only half the job; the other half is building an income engine that runs cleanly for the rest of their lives.

"The win isn't the price you sell for. It's how much of that price is still yours after tax — and how hard it works once it's invested."

The good news, which the couple hadn't fully appreciated, was that Australia's tax system is unusually generous to small business owners selling up at the end of their working lives. The catch is that the concessions are intricate, sequenced, and unforgiving of mistakes. Getting them right is exactly the kind of structural work that has to happen before settlement, not after.

Stacking the small business CGT concessions

The foundation of the whole strategy was the small business CGT concessions under Division 152 of the tax law. These exist precisely for situations like this one: a genuine small business owner, selling an active asset they've held for years, at the end of their career.

The first job was confirming eligibility. While the business's turnover was above the $2 million small business threshold, the couple comfortably passed the alternative $6 million maximum net asset value test — the total net value of their CGT assets sat under that ceiling just before the sale. The goodwill they were selling was an "active asset," used in the business for the entire ownership period. They qualified.

Because they had owned the business continuously for more than 15 years and were both over 55 and retiring, they were eligible for the most powerful concession of all: the 15-year exemption. Where it applies, the entire capital gain on the active asset is disregarded — not reduced, not deferred, but completely exempt. The capital gain on the goodwill was approximately $1.8 million. Under the 15-year exemption, the whole of it was disregarded. The capital gains tax payable on that gain was nil.

It's worth pausing on what that means in plain numbers. Without the concession, a gain of $1.8 million — even after the general 50% CGT discount — would have produced a tax bill comfortably in the hundreds of thousands. The 15-year exemption reduced that to zero. That is the single highest-leverage decision in most business exits, and it's the one owners most often miss by selling without advice.

Getting the proceeds into super — without breaching the caps

Disregarding the gain solves the tax problem. It doesn't, on its own, solve the income problem. The next move was getting the proceeds into superannuation — the most tax-effective environment available for retirement income — without tripping over the ordinary contribution limits.

This is where the 15-year exemption does something else valuable. It unlocks the CGT cap — a separate, lifetime contribution allowance that sits outside the normal non-concessional contributions cap. For the 2025–26 financial year that cap is $1.865 million per person. Sale proceeds connected to a 15-year-exemption asset can be contributed to super up to that cap, entirely separately from the standard limits that would otherwise restrict large contributions.

Each spouse contributed $900,000 of the proceeds into superannuation as a CGT cap contribution — $1.8 million in total. Both amounts sat well within the $1.865 million lifetime cap, and because these were CGT cap contributions, neither touched the couple's non-concessional limits. The election forms had to be completed correctly and lodged within strict timeframes, working alongside their accountant — the kind of detail that quietly sinks contributions when it's left to chance.

Critically, they did not tip every last dollar into super. Superannuation is preserved and access is rule-bound, so we deliberately retained a portion of the proceeds outside super as an accessible cash and investment buffer. That gives the couple liquidity for the early years of retirement — a new vehicle, home improvements, travel, or simply peace of mind — without having to draw awkwardly against locked-away money.

Switching on a tax-free income

Money inside super in accumulation phase still has its earnings taxed — concessionally, at up to 15%, but taxed nonetheless. The final move was shifting the couple's balances from accumulation into retirement-phase account-based pensions, where the rules change entirely: investment earnings are tax-free, and because both are over 60, the pension payments they draw are tax-free in their hands as well.

The constraint here is the transfer balance cap — the lifetime limit on how much each person can move into the tax-free retirement phase. For 2025–26 that cap is $2 million per person. After their CGT cap contributions, the husband's balance stood at roughly $1.58 million (his existing $680,000 plus the new $900,000) and the wife's at around $1.33 million ($430,000 plus $900,000). Both sat comfortably under the $2 million cap — which meant each could move their entire balance into a tax-free pension, with cap space still to spare.

The result is a combined $2.9 million now invested in the tax-free retirement environment, across two account-based pensions. Drawing a sustainable income of around 4.5% produces a target of approximately $130,000 per year — and not a dollar of it is taxable. No annual tax on the fund's earnings, no tax on the income they draw, and no franking complexity to manage.

What made this work

This exit worked because the structural decisions were made before settlement, not bolted on afterwards. The small business CGT concessions, the CGT cap contributions, the transfer balance cap, and the timing of the pension commencement all had to line up in the right sequence and within the right financial years. Reverse-engineering any of that after the money had already landed in a bank account would have left real value on the table.

It also worked because the advice was built around the whole picture, not a single product. The sale, the tax, the contribution strategy, the income engine, and the estate plan are not five separate problems — they're one problem with five moving parts, and they have to be solved together. The accountant confirmed the CGT eligibility and lodged the elections; the financial advice set the strategy and the sequencing; the legal documents followed. Everyone in their lane, pulling in the same direction.

Regional Prosperity works with business owners across South West Victoria — from Colac to Warrnambool, Geelong to Hamilton — on exactly these kinds of transitions. The figures in this case study reflect the 2025–26 rates and thresholds, and every business is different. But the principle holds for almost all of them: the best time to plan your exit is well before you shake hands on the price.