Does Anyone Know If Capital Gain Tax Applies To a Website Sale

Oh no doubt there are loads of website sales where the website is really quite worthless but still manages to be sold to some silly buyer that missed the whole dot com boom thing... but the vast majority of those sites sell for under $1000 and I don't think many people would bother with seeking tax advice, they'd just right it off as income.

I would argue on the other hand that website sales are for $10,000 and above, as in your example for the most part include significant performance records. Sure there are few exceptions when it comes to premium domain names but even then performance of that domain is often already exisiting.

Well some of my sites earn $50,000+ a year... I'm a young man but I'd call that significant, but that's just my yardstick. So I'd assume that anyone that was willing to to buy one of my sites would be "substantially increasing their profit structure relative to the investment".

Oh I have never argued that income from the sites isn't taxable... it's just that I'm launching a bunch of new projects which I imagine will yield a lot more from their eventual sale than they will from their advertising income, due to the fact that they are more industry based sites and will be many times more valuable to a business in the industry than myself. Thus the reason I'm so curious about capital gains on websites.

 

I'm not a young man, but I call five bucks "significant" if you earn it doing something you love. But the issue on this thread is CGT - which is about what YOU sold, not what the other person BUYS, so if a multi-billionaire buys your site to advertise their 3 year old's birthday party next Sunday, then shuts it down, the concept of how hard you worked is irrelevant.

If your many sites each earn you $50,000 + per year you could potentially sell one of then with minimal impact on your business. I still don't see where that would create a CGT event unless you are operating in a very unorthodox manner.

If you only have one or 2 sites worth anything and you sell one that earns $50K+ pa then I can see where some of the descriptions in this thread mean you have sold something that used to be a substantial part of your business.

Anyway, whatever works for you ... have fun ... at the end of the day that's all that matters

 

Selling all or part of your business is definitely a CGT event.

Even where you are franchising, you will enter into restraint contracts which are themselves CGT events.

Whether CGT actually applies depends on if the transaction is already regarded as income (e.g. royalties), or whether any CGT concessions apply.

Please get some advice.

Cheers,

Rob

 

Hi Rob

Not sure if you are suggesting myself or Chris gets some advice. I don't need additional advice, 'cos I ain't selling anything. But I agree as per my original post Chris should definitely get some advice. The major question is whether a 'website' is 'part of his business' ... in our business each of our numerous websites is simply an advertising vehicle... and they don't meet the ATO definitions mentioned in this thread. Sure, some generate ok income (which we pay tax on) but so do the yellow pages ads for some businesses. They still wouldn't get charged CGT if they sold on their ad/phone number to somebody, without selling the business. My point is a I think there are a lot of assumptions in discussions on this thread that miss the reality of 'most' website sales.

Cheers
Carl

 

Yes - we always have to make assumptions becuase the exact, complete and perfect information is not always provided.

With Chris C's website I have made the assumption that it not just involves the transfer of the domain name, but also the software, content, systems, contracts, contacts, relationships, customer and affiliate database, documentation and the full spectrum of the entire web based 'business'.

And I totally agree that a simple transfer of the right to use a domain name to someone else wouldn't be considered a business.