In any business sale transaction tax implications are a critical consideration. One of the key factors in determining after-tax outcomes can often be the apportionment of sale price to individual assets.
In most cases the vendor wants to minimise the allocation to stock, depreciable assets and non-concessional CGT assets, while the purchaser wants the opposite.
It may be in both their interests that the consideration not be allocated on the contract, and instead allocated independently. From an Income Tax perspective, the allocations need not agree unless the assets are sold to a related party.
Each party should allocate a reasonable amount to each asset (ie. fair market values). Where the allocation is not reasonable, market value substitution rules and/or Part IV-A of the Tax Act may be applied to the transaction.
In some States, Stamp Duty applies to different components of the consideration at differing rates eg Victoria, where (as of this writing) Goodwill and intellectual property are not dutiable property. This may make it necessary for the parties to agree on apportionment of the sale price.
Practices vary from State to State. In Queensland, there is no price apportionment on most business sale contracts.
Purchasers and vendors should always consult their tax advisers before signing a contract.