Australia guides

Should I sell the assets or the shares of my company?

In an asset sale you sell the business — goodwill, equipment, stock and contracts — and keep the company. In a share sale you sell the company itself, and the buyer takes its whole history with it, including liabilities nobody has found yet. That asymmetry is why buyers usually prefer asset sales and sellers usually prefer share sales, and why the tax, stamp duty and employee consequences differ so much between the two. The choice is decided with an accountant and a solicitor on your specific facts, not from a general rule.

By the bizflip team · Published 2 September 2026 · Facts checked 2 September 2026 · Sources listed below

There are two ways to sell an incorporated Australian business. In an asset sale the company sells the business — goodwill, plant and equipment, stock, customer lists, contracts — and you keep the company. In a share sale you sell your shares, and the company changes hands intact: same entity, same contracts, same registrations, same history.

That last word is the point. A share sale carries the company's past with it, including liabilities neither side has found yet. An asset sale generally does not, and almost every other difference — tax, duty, employees, consents — follows from that.

The two structures side by side

Liabilities are the heart of it

A buyer taking over a company takes its tax position, employment history, warranty and consumer-law exposure, contract disputes and anything else that has not surfaced. Underpaid wages, unpaid superannuation and creditor disputes are the classic examples — Business Queensland advises buyers to obtain warranties and indemnities covering exactly those. In an asset sale a buyer picks up defined assets and leaves the corporate history behind, which is why their adviser usually opens on one.

A seller's incentive runs the other way: a share sale ends their association with the entity cleanly and often produces a better personal tax outcome. The structure is a negotiated term with money attached, not an administrative detail. If a buyer will take shares, expect them to price the risk — through warranties, indemnities, a retention or an earn-out.

Capital gains tax

Who makes the gain differs. In an asset sale the company disposes of the assets, so the gain arises inside the company — and companies cannot use the 50% CGT discount, which applies to individuals and Australian trusts holding an asset at least 12 months (complying super funds get 33.33%). Getting the proceeds out of the company to you is then a separate exercise with its own tax consequences. In a share sale you dispose of the shares personally, and holding them at least 12 months may bring the discount into play.

The small business CGT concessions can apply either way, but only if you meet the conditions. The ATO's first step is being an eligible entity: either a CGT small business entity with aggregated turnover under $2 million, or you meet the maximum net asset value test — the total net value of CGT assets owned by you, entities connected with you, your affiliates and entities connected with them must not exceed $6 million just before the CGT event. That limit is not indexed for inflation. Step two is the active asset test.

Where the asset is a share or a trust interest, the ATO applies additional conditions: you must have been a CGT concession stakeholder, or the CGT concession stakeholders must have a total small business participation percentage of at least 90%. A CGT concession stakeholder is a significant individual, or the spouse of one with a participation percentage above zero. This is where a share sale that looked simple turns out to depend on the shareholding structure.

If you qualify there are four concessions: the 15-year exemption, the 50% active asset reduction, the retirement exemption (active-asset gains disregarded up to a lifetime limit of $500,000 per individual or CGT concession stakeholder) and the small business roll-over. All except the 50% reduction carry further requirements.

GST

GST is mostly an asset-sale question. No GST is payable on the sale of a going concern if certain conditions are met — broadly, that the seller supplies everything necessary for the continued operation of the enterprise, carries it on until the day of the supply, and the parties agree in writing that the supply is of a going concern. The ATO points to ruling GSTR 2002/5 for whether a specific sale qualifies. Confirm it rather than assuming it: this is a condition-by-condition test, not a category a sale falls into automatically.

A share sale is different in kind: buying or selling shares is a financial supply, and financial supplies are input-taxed — no GST in the price, and GST credits generally cannot be claimed on the costs of making them. That last part matters for the transaction costs on a share deal.

Stamp duty, and the share-sale trap

Stamp duty is state and territory law, with no national rule. In Queensland, transfer duty may apply when you acquire a Queensland business, and business assets there expressly include goodwill and intellectual property — the Queensland Revenue Office notes goodwill may form part of a transaction even where the agreement does not mention it, and its existence may make the transaction dutiable.

The trap runs the other way on share sales. A share transfer is not automatically duty-free: where the company holds land, landholder duty can apply. In NSW you may be liable when you acquire a significant interest in a company or unit trust scheme with landholdings over $2 million. Thresholds differ in every jurisdiction, so check the duty position in the state where the business and its land sit, before the structure is agreed.

Employees

An asset sale where staff come across is a transfer of business under the Fair Work Act. The Fair Work Ombudsman's test: the employee begins working for the new employer within three months of ending their job with the old one, their duties are the same or nearly the same, and there is a connection between the employers — including where the old employer sells business assets to the new one. The new employer must then recognise service with the old employer for most entitlements, including sick and carer's leave, flexible working requests and parental leave. Where the employers are not associated entities, the new employer can choose not to recognise prior service for redundancy and annual leave — in which case the old employer pays out the accumulated annual leave and any redundancy.

Because that test turns on the employee beginning work for a new employer, a share sale does not trigger it. The employing company is the same legal entity before and after, employment continues unbroken, and every accrued entitlement stays on the company's books. Nothing is paid out: the buyer inherits the liability, and it belongs in the price.

Contracts, leases and licences

In an asset sale, everything has to move. business.gov.au puts the lease question directly to buyers: will the landlord agree to transfer the lease, or will a new one have to be negotiated? Licences and permits often cannot transfer at all and must be applied for in the buyer's name — the Australian Business Licence and Information Service lists what a business type needs in a given state. The business name goes through ASIC, which issues the seller a transfer number for the buyer to register against their own ABN. Supplier and customer contracts commonly need consent to be assigned.

In a share sale the company keeps all of it, which is the practical attraction — but it is not automatic either. Change-of-control clauses appear in leases, supplier agreements, finance documents and licences, and are typically triggered when someone acquires more than half the voting shares or the right to appoint a majority of directors. A buyer who completes without those consents can find a critical contract has terminated. Map the contracts that carry the earnings and check them early, whichever structure you use.

The two sides usually want opposite things

• Buyers generally prefer an asset sale — defined assets, no inherited corporate history.
• Sellers generally prefer a share sale — a clean exit, and often a better personal CGT outcome.
• Which side wins comes down to negotiating position and price. A seller insisting on a share sale should expect the buyer to want stronger warranties and indemnities in exchange.

How the decision actually gets made

Not from a rule of thumb. The inputs are your entity structure, who owns the shares and in what percentages, whether you meet the small business CGT conditions, what the company owns (particularly land), what the lease and key contracts say, whether staff are transferring, and which state the business sits in. Those are not conditions to assess from a web page, and the same business can be worth a materially different amount to you after tax depending on the structure.

This page is general information, not tax or legal advice about your circumstances. Settle the structure with your accountant and solicitor before you go to market, not after an offer arrives — by then it is a negotiation rather than a decision. How to sell a business in Australia covers the rest of the process, and documents needed to sell a business what a buyer will ask for under either structure.

Sources

Every load-bearing claim in this guide, and where it comes from:

• To be eligible for the small business CGT concessions you must first be an eligible entity: a CGT small business entity with an aggregated turnover of less than $2 million, or you must meet the maximum net asset value test. The asset must then pass the active asset test. — Australian Taxation Office
• You are a CGT small business entity for the concessions if you have an aggregated turnover of less than $2 million. — Australian Taxation Office
• Under the maximum net asset value test, the total net value of CGT assets owned by you, entities connected with you, affiliates and entities connected with your affiliates must not exceed $6 million, measured just before the CGT event. The $6 million limit is not indexed for inflation. — Australian Taxation Office
• Where the CGT asset is a share in a company or an interest in a trust, additional conditions apply: you must have been a CGT concession stakeholder, or the CGT concession stakeholders must have a total small business participation percentage of at least 90%. A CGT concession stakeholder is a significant individual, or the spouse of a significant individual with a participation percentage above zero. — Australian Taxation Office
• The four small business CGT concessions are the 15-year exemption, the 50% active asset reduction, the retirement exemption and the small business roll-over. — Australian Taxation Office
• Under the small business retirement exemption, capital gains from the disposal of active assets may be disregarded up to a lifetime limit of $500,000 per individual, or per CGT concession stakeholder for a company or trust. — Australian Taxation Office
• The 50% CGT discount applies where an asset is owned for at least 12 months. Australian trusts can discount a capital gain by 50% and complying super funds by 33.33%; companies cannot use the CGT discount. — Australian Taxation Office
• No GST is payable on the sale of a going concern if certain conditions are met; the ATO directs sellers to GSTR 2002/5 to work out whether a particular sale qualifies. — Australian Taxation Office
• Buying or selling shares or other securities is a financial supply. All financial supplies are input-taxed sales, do not have GST in their price, and GST credits generally cannot be claimed. — Australian Taxation Office
• In Queensland, transfer duty may apply to the transfer of business assets, which include goodwill and intellectual property; goodwill may form part of a transaction even if the agreement does not mention it, and its existence may make the transaction dutiable. — Queensland Revenue Office
• In NSW you may be liable for landholder duty when you acquire a significant interest in a company or unit trust scheme with landholdings over $2 million. — Revenue NSW
• A transfer of business occurs where an employee begins working for a new employer within 3 months of ending their job with the old one, their duties are the same or nearly the same, and there is a connection between the employers, including where the old employer sells business assets to the new employer. — Fair Work Ombudsman
• On a transfer of business the new employer must recognise service with the old employer for most entitlements including sick and carer's leave, flexible working requests and parental leave; where the employers are not associated entities the new employer may choose not to recognise prior service for redundancy and annual leave, in which case the old employer pays out accumulated annual leave and any redundancy. — Fair Work Ombudsman
• Due diligence on a business purchase must establish whether the landlord will agree to transfer the lease or a new lease must be negotiated, whether licences and permits are current, and whether supplier agreements are outstanding. — business.gov.au (Australian Government)
• Licences and permits depend on business activity and state or territory, and are identified through the Australian Business Licence and Information Service (ABLIS). — business.gov.au (Australian Government)
• A business name is transferred by the current holder starting the transfer with ASIC and giving the resulting transfer number to the new owner, who registers the name against their own ABN. — Australian Securities and Investments Commission
• Change of control clauses are typically triggered when someone acquires more than 50% of voting shares or the right to appoint a majority of directors, appear in leases, supplier contracts, finance documents and licences, and may require consent, so a buyer completing without them can find key contracts have terminated. — Sprintlaw
• Buyers should obtain specific warranties and indemnities from the seller before signing, covering matters such as underpaid wages, unpaid superannuation and disputes with creditors over unpaid invoices. — Business Queensland (Queensland Government)

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