Build the retirement plan before the deal, not after. Most senior pharmacists do it the other way and pay six figures of avoidable tax.
Your exit isn't a normal business sale.
A pharmacy can't go to the open market. The Pharmacy Business Ownership Act 2024 (QLD), in force from 1 November 2025, restricts ownership to practising pharmacists or their close adult relatives, capped at five pharmacies per pharmacist. Equivalent rules apply in every state. Your buyer pool is your junior partner, another practising pharmacist, or a pharmacist-controlled group. A private equity buyer can't have you.
That's why most senior-to-junior exits become a staged buyout. Banks lend pharmacy buyers at 60-80% LVR, so the junior needs 20-40% of their own capital. Trading continuity usually matters more to the deal than the headline price.
If your business sits in a discretionary trust drafted before 2024, the deed almost certainly lists beneficiaries who aren't practising pharmacists. Section 218 of the new Act gives you until 1 November 2027 to amend it. Eligible restructures may attract a duty exemption under QRO Public Ruling DA000.19.1. Start that now.
How these deals get structured.
Staged share or unit transfer. The junior buys in tranches over five to ten years. Each tranche is a separate CGT event.
Vendor finance. You finance part of the buyer's purchase, secured against the equity they're acquiring. This is how most partner buy-ins get over the line. You're now both seller and financier of the same asset, so concentration risk is real.
Earn-out. Final price partly tied to script growth or EBIT. Useful when senior and junior can't agree on goodwill.
Insurance-funded buy/sell agreement. Life and TPD sized to current equity, so death or disability triggers a funded buyout instead of a fire sale.
What drives the price.
Australian pharmacy valuations use a capitalisation rate on adjusted EBIT, after market salary for the owner. Lower cap rate, higher price.
Where the cap rate sits.
5.9 to 7.7x adjusted EBIT
Long lease, healthy front of shop, strong scripts.
5.3 to 5.9x adjusted EBIT
Mid market, mixed lease tenure.
4.5 to 5.3x adjusted EBIT
Thinner buyer pool, higher risk premium.
The Eighth Community Pharmacy Agreement (2024-29) adds $26.5 billion over five years with CPI indexation on dispensing fees and the Additional Community Supply Support payment offsetting 60-day dispensing. Well-run pharmacies are getting more predictable forward revenue, which generally supports tighter cap rates.
Don't anchor to what you paid in 2008 or to a friend-of-a-friend rule of thumb. Get a current valuation from a specialist (Medici, Practice4Sale, AP Group).
The tax piece.
Anchor legislation: Division 152 of the Income Tax Assessment Act 1997. Four small business CGT concessions, applied in this order.
How the gain gets reduced, in order.
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01
15-year exemption. Held 15+ years, active asset, age 55+, sale connected with retirement. Full CGT exemption. For most senior pharmacists who bought in the early 2000s, this is the headline.
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02
50% active asset reduction. Stacks on the general 50% CGT discount. Individual assessable gain falls to 25% of the original.
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03
Retirement exemption. Up to $500,000 lifetime per CGT concession stakeholder. Under 55, the exempt amount has to go into super.
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04
Small business rollover. Defer by acquiring a replacement active asset within two years.
Gatekeepers: the $2m aggregated turnover test or $6m maximum net asset value test, and the active asset test. For a share or unit sale, the 80% active asset test and significant individual rules catch a lot of deals if the structure isn't right.
The super lever: the CGT cap for 2024-25 is $1,780,000 lifetime per person, indexed to AWOTE. Amounts from the 15-year exemption or retirement exemption use this cap instead of your non-concessional cap. Used right, you can move very significant capital into super without burning your non-concessional headroom. The same deal with the wrong structure, missed timing, or a share-versus-asset error costs six or seven figures of avoidable CGT.
The mistakes we see most.
- Signing a Heads of Agreement before any modelling
- No written buy/sell agreement, so death, TPD, divorce, or dispute forces a distressed exit
- Underinsured against current equity value
- Anchoring goodwill to what was paid decades ago
- Lawyer, accountant, broker, and adviser working in parallel with no one quarterbacking the order
Where to start.
Where to start, in sequence.
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01
Pharmacy valuation. Specialist valuer. Defensible cap rate, EBIT base, equity value.
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Financial planning piece
02
Retirement income model. Lifestyle target, longevity, Age Pension, super, estate intent.
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03
Exit structure. Asset vs share sale, staged or single, vendor finance, trust compliance.
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04
Tax model per tranche. Division 152 stack, CGT cap super contribution timing.
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05
Super, insurance, estate. Buy/sell deed, life and TPD, BDBNs, Wills, EPOAs.
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06
Execute. Lawyer drafts contracts. Accountant runs CGT. Adviser quarterbacks.
Steps two through five are the financial planning piece. They're the constraints the deal should be built around, not the cleanup at the end.
Run the numbers before the deal gets locked in.
We model your retirement income across each sale structure on the table and tell you what each one actually leaves you with over the next 20 years. First meeting's free, no obligation.
Book a meetingThis article is general information only. It doesn't take your personal circumstances into account and isn't intended as personal advice. Tax outcomes and CGT concession eligibility depend on your specific situation, the structure of your business, the timing of any sale, and current legislation. Get advice tailored to you before acting. Cap rate ranges cited are public industry commentary from late 2024 and shouldn't be relied on as a current valuation for your business.
Great Advice Online is a trading name of Aetos Wealth Advisors Pty Ltd, authorised representative of Akumin Financial Planning Pty Ltd, AFSL 232706.
