Late SMSF Tax Returns
What is a section 52?
A section 52 is a formal statement which is prepared when a vendor, (seller) of a small business would like to sell their business. These statements must be prepared for business purchases under $450,000 in total value. The statement must be prepared using the prescribed form under the Estate Agents (General, Accounts and Audit) Regulations 2018.
What is included in a section 52?
The sections that are included in the section 52 are:
- Section A: An outline of what information is to be provided to the vendor.
- Section B: An outline of what information is to be provided to the purchaser.
- Section C: Details about the business and the vendor’s agent.
- Section D: The operating report for the business and a statement from an accountant.
- Section E: Vendor’s declaration.
- Section F: Purchasers declaration.
Why is a Section 52 prepared?
The purpose of the statement is to indicate the general performance of the business being sold during the past two financial years, operating costs, and with the statement also including the financial performance of the business up until the most recent quarter for the financial year. A practising accountant must also state that the financial and accounting statements that form part of the section 52 are in accordance with the records the vendor has kept and the statements reflect this information.
I have the financials already, would this not be enough?
A section 52, in effect is an accountant signed statement which confirms what you are declaring to the purchaser is true and holds correct with what you have been declaring to the Australian Taxation Office.
Does Section 52, help me determine what my business is worth?
A Section 52, may not be the only tool used by the purchaser and their agents. There could be many other aspects affecting the value of the business. However though, the Section 52 is a key document when determining the value that can be ascertained based on the overall profitability of the business being sold.
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