Business

The sale and purchase of businesses in Victoria can be complex due to various legal, financial and regulatory considerations.

In Victoria, commercial leases are agreements between landlords and tenants for the rental of commercial properties. These leases can vary widely in terms of their structure, duration and specific terms.

Namely, following are the main different types of commercial leases:

Retail Leases is governed by the Retail Leases Act 2003 (Vic). These leases apply to businesses that sell goods or services directly to consumers.

Office Leases is for commercial office spaces, these leases typically include terms for rent, maintenance, and fit-out and they are governed by general contract law rather than specific legislation.

Industrial Leases is used for properties like warehouses and factories, and they may cover longer lease terms and various outgoings and specific regulations may apply depending on the nature of the business.

Mixed-Use Leases is for properties that combine residential and commercial spaces, governed by both residential and commercial lease laws.

Council Permit

In Victoria, a council permit for business, often referred to as a business license or permit, is a legal requirement issued by local councils that allows a business to operate within a specific area. The need for a permit can vary depending on the type of business, its location and the activities involved.
Compliance with local regulations ensures that businesses can operate legally and avoid potential fines or disruptions. You should always check with your local council for the most accurate and relevant information related to your specific business.

Business Insurance

As a business owner in Victoria, Australia, there are several types of insurance you may need to consider protecting your business from potential risks. The specific insurances required can depend on the nature of your business, its size and the industry in which you operate.
The specific insurance needs for your business will vary depending on its nature and size. It’s crucial to assess the risks associated with your operations and consult with an insurance broker or advisor to ensure you have adequate coverage tailored to your business’s unique needs. This will help protect your assets and minimize potential liabilities.

The following are the overview of the essential insurances for business owners in Victoria:

Public Liability Insurance
Workers’ Compensation Insurance
Professional Indemnity Insurance
Business Interruption Insurance
Property Insurance
Cyber Insurance
Commercial Vehicle Insurance
Management Liability Insurance
Personal Accident Insurance
Income Protection Insurance
Product Liability Insurance
General Liability Insurance
Directors and Officers Insurance
Employment Practices Liability Insurance
Environmental Liability Insurance
Key Person Insurance
Fidelity Bond
Crime Insurance
Health Insurance
Flood Insurance
Volunteer Insurance
Special Event Insurance
Long-Term Disability Insurance
Short-Term Disability Insurance
Trade Credit Insurance

Insurance Claim Denial

In business insurance application, with incorrect or misleading information, you can have several serious consequences. The below are few of the examples:

Policy Cancellation
If the insurance policy has already been issued and incorrect information is discovered afterward, the insurer may cancel the policy. The cancellation can occur if the insurer finds that the inaccuracies are significant or if they affect the risk assessment.
Claim Denial
If you file a claim and the insurer finds that the information on your application was incorrect, they may deny your claim. If you underreported the number of employees or omitted a critical aspect of your business, the insurer may argue that the policy is void or that they would not have issued coverage had they known the correct information.
Legal Consequences
Providing false information on an insurance application can be considered fraud. If the insurer believes that the inaccuracies were intentional, they could pursue legal action against you or your business. This could result in fines or other penalties.
Difficulty Obtaining Future Coverage
If your application is denied or your policy is cancelled due to inaccuracies, it may be challenging to obtain coverage from other insurers in the future. They may view your business as a higher risk based on your previous experiences.
Reputational Damage
If issues arise due to incorrect information, it may harm your business’s reputation, especially if claims are denied publicly or if legal actions are taken against your business.
Increased Premiums
If inaccuracies lead to a reassessment of your risk profile, you may face higher premiums upon renewal. Insurers may adjust rates based on the correct information which could result in significantly higher costs.

Australian Taxation Office (ATO)

The Australian Taxation Office (ATO) administers most taxes. States and territories administer some others.

The taxes that may apply to your business include:

Federal taxes

Income tax for business
Goods and services tax (GST)
Pay as you go (PAYG) withholding
PAYG instalments
Capital gains tax
Fringe benefits tax
Fuel tax credits
Wine equalisation tax
Luxury car tax

State or territory taxes

Payroll tax
Stamp duty
Taxes on your property

Capital Gains Tax

If your business sells an asset, such as property, you usually make a capital gain or loss. This is the difference between what it cost you and what you get when you sell (or dispose of) it.

CGT is the tax that you pay on any capital gain. It’s not a separate tax, just part of your income tax.

The most common way to make a capital gain or loss is by selling an asset. This is called a CGT event.

Examples of CGT events are when you:

Sell or give an asset to someone
Lose an asset or it is destroyed
Own shares that are cancelled, surrendered or redeemed
Stop being an Australian resident
Get a payment from a company (not a shareholder dividend)

CGT Concessions

There are 4 small business CGT concessions that you can use to reduce capital gain on business assets. You can apply for as many concessions as you’re entitled to – this may reduce the capital gain to zero. Just make sure you meet the CGT concession conditions.

The following are the CGT concessions:

Small business 15-year exemption
Small business 50% active asset reduction
Small business retirement exemption
Small business rollover

Goods and Services Tax (GST)

Goods and services tax (GST) applies to most goods and services sold in Australia. Goods and services tax (GST) is a tax of 10% on most goods, services and other items sold or consumed in Australia. If your business is registered for GST, you have to collect this extra money (one-eleventh of the sale price) from your customers. You pay this to the Australian Taxation Office (ATO) when it’s due.

A going concern is a business that is operating and making a profit. No GST is payable on the sale of a going concern if certain conditions are met. However, as the seller, you may be able to claim input tax credits for GST you paid on expenses relating to the sale.