When you sell a business through a company, there are two ways to do it. You can sell the business itself, its goodwill, equipment, stock and contracts, in an asset sale. Or the shareholders can sell their shares, so the company and everything in it changes hands, in a share sale. The choice affects your tax, what the buyer takes on, what happens to staff and leases, and often the price. This guide compares the two side by side.
In short
Asset sale. The entity that owns the business, whether a company, trust, partnership or sole trader, sells the business assets to the buyer. These usually include goodwill, plant and equipment, stock, the business name, intellectual property and the benefit of contracts. The seller keeps the entity itself, along with its cash, debts and trading history. A company that has sold its business is often wound up afterwards.
Share sale. The shareholders sell their shares in the company that owns the business. The business never leaves the company. What changes is who owns the company, so the buyer takes it over with all its assets, contracts, employees, liabilities and history.
A share sale is only possible when the business is owned by a company. A sole trader or partnership can only sell assets. A business owned by a unit trust can be sold as assets or, in some cases, by selling the units.
Which is more common? Most small business sales in Australia are asset sales. Share sales are more common for larger businesses, and where valuable contracts, licences or a long trading history sit inside the company.
| Asset sale | Share sale | |
|---|---|---|
| What is sold | The business assets: goodwill, equipment, stock, IP and contracts | The shares in the company that owns the business |
| Who sells | The company, trust or individual that owns the business | The shareholders |
| Liabilities and history | Stay with the seller unless the contract says otherwise | Stay with the company, so they pass to the buyer |
| Lease and contracts | Must be assigned to the buyer, usually with consent | Stay in place, subject to change-of-control clauses |
| Licences and permits | Transferred or reapplied for by the buyer | Usually stay with the company, though regulators may need to approve new owners |
| Employees | Employment with the seller ends. The buyer may offer jobs | Stay employed by the same company, with entitlements intact |
| GST | Usually GST-free if sold as a going concern | No GST on the sale of shares |
| Stamp duty for the buyer | Depends on the state and the assets | Usually none, unless the company holds land above the state’s landholder threshold |
| Contract and due diligence | Standard business sale contract for the state; due diligence on the business | Share sale agreement with warranties and indemnities; due diligence on the whole company |
| Typical for | Most small and medium businesses | Larger businesses and those with hard-to-transfer contracts or licences |
Who pays the tax, and how much, depends on how the business is owned and which way it is sold.
Get advice early. Tax outcomes depend on how your business is structured, how long you have owned it and your age. Ask your accountant to model both structures after tax before you negotiate, because the structure is hard to change once a buyer is involved.
To use the concessions, the business generally needs an aggregated turnover under $2 million, or net assets of $6 million or less, and the assets sold must be active assets used in the business. There are four concessions, and some can be combined.
| Concession | What it does | Key conditions |
|---|---|---|
| 15-year exemption | The whole capital gain is disregarded | Owned for at least 15 years, and you are 55 or over and retiring, or permanently incapacitated |
| 50% active asset reduction | Halves the capital gain | Can be used on top of the 50% general discount by individuals and trusts |
| Retirement exemption | Exempts up to $500,000 of gains over your lifetime | If you are under 55, the amount must be paid into superannuation |
| Rollover | Defers the capital gain | You buy a replacement active asset within the allowed period |
The conditions are detailed, and the ATO looks closely at these claims. See capital gains tax on the sale of a business and speak to your accountant.
In an asset sale, the buyer chooses which assets to take and leaves the company’s past behind. Old tax debts, claims and employee underpayments stay with the seller. The buyer also gets a fresh cost base for the equipment it buys, which can mean better depreciation.
In a share sale, the buyer inherits everything the company has done, including liabilities nobody knows about yet. That makes due diligence longer and more expensive. On the other hand, a share sale can keep contracts, licences, tenders and supplier terms in place without needing consents, and the buyer may pay less stamp duty.
Warranties and indemnities. In a share sale, expect the buyer to ask for warranties about the company’s tax, accounts, employees and legal position, an indemnity for problems that surface later, and sometimes part of the price held back for a period. These keep some risk with you after settlement.
Asset sale: employment with the seller ends. The buyer can offer jobs to some or all staff. If they accept, their service usually carries over for most entitlements. A buyer that is not associated with the seller can choose not to recognise prior service for annual leave and redundancy, in which case the seller pays out the leave.
Share sale: nothing changes for staff. The company keeps employing them, and all their entitlements stay with the company, so the price usually allows for them.
Asset sale: the lease is assigned to the buyer, which needs the landlord’s consent. You may stay liable under the lease unless the landlord releases you. See selling a business with a lease.
Share sale: the tenant does not change, but many leases treat a change in who controls the company as an assignment, so consent may still be needed. Check the lease early.
Asset sale: customer, supplier and franchise agreements must be assigned or replaced, and licences transferred or reapplied for.
Share sale: contracts and licences usually stay with the company. Check for change-of-control clauses, and whether a regulator needs to approve the new owners or directors.
| Situation | Usually suits |
|---|---|
| You trade as a sole trader or partnership | Asset sale. It is the only option |
| A small business company, and the buyer wants a clean start | Asset sale |
| Valuable contracts, licences or tenders that are hard to transfer | Share sale |
| A company with clean records and a long trading history | Either. A share sale may be possible |
| The company owns property you want to keep | Asset sale, or move the property out before a share sale |
| You want the company’s liabilities off your hands | Share sale, though you will give warranties |
Price and structure are linked. A buyer taking on more risk in a share sale may offer less, and a seller facing more tax in an asset sale may need more. Compare the two on what you keep after tax, not on the headline price. For the rest of the process, see how to sell a business, step by step.
It depends on how the business is owned. A share sale can mean less tax and a cleaner exit for shareholders of a company, but you will give warranties and buyers may offer less. An asset sale is simpler and more common. Your accountant can model both.
An asset sale is usually GST-free if it qualifies as the sale of a going concern. Otherwise GST applies. There is no GST on a share sale. See selling a business as a going concern.
Usually not. Most states no longer charge duty on transfers of shares in private companies. The main exception is landholder duty, which can apply when the company holds land above the state’s threshold. See the stamp duty guide.
They stay with the company. Loans secured over business assets are usually paid out at settlement so the security can be released. See selling a business with debt.
Yes. The trustee usually sells the business assets. Where the business is in a unit trust, selling the units is sometimes possible instead.
Yes. You can sell some of your shares to a partner, manager or investor. Check your shareholders agreement and constitution first, as they often give existing shareholders a first right to buy.
No. Their employer does not change in a share sale, so their employment simply continues. In an asset sale, staff choose whether to accept the buyer’s offer of employment.
Related guides
Talk to a specialist broker about how businesses like yours usually sell and what buyers will expect. Confidential and no obligation.
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This guide is general information, not legal, tax or financial advice. Tax and duty outcomes depend on your circumstances. Speak to your accountant and solicitor before you choose a structure.
Australian Taxation Office guidance on the small business CGT concessions and GST on the sale of a going concern; Fair Work Ombudsman, employee entitlements on a transfer of business; state revenue office guidance on landholder duty. Checked 23 October 2026.
