Section 52 Statement: What Victorian Business Sellers Need to Know

By Michael White, Director and licensed estate agent

A Section 52 statement is the vendor's statement you must give the buyer when you sell a small business in Victoria. It applies when the goodwill, plant, equipment and fittings are being sold for $450,000 or less. It sets out the business's trading figures for the last two accounting periods and the current year to date, with a practising accountant's statement that the figures match your books. The buyer must receive it before they sign the contract or pay a deposit.

Many owners first hear of it when a buyer's solicitor asks for one. By then it's a rush, because your accountant has to check more than two years of figures against your books. This guide explains what's in the statement so you can start it early.

Do you need a Section 52 statement?

The requirement comes from section 52 of Victoria's Estate Agents Act 1980. It covers a "small business", which the official form defines as one where the goodwill, plant, equipment and fittings being sold have a total price of $450,000 or less.

• Licensed businesses are exempt. Section 52 doesn't apply to a business that holds a liquor licence or permit and couldn't lawfully be run without one, such as a pub, bar or bottle shop.
• Stock isn't counted. The price test covers goodwill, plant, equipment and fittings, so stock sold at value on top isn't part of the $450,000.
• Over $450,000: a Section 52 statement isn't required, but buyers will ask for the same figures, so the preparation is still worth doing.

What's in the statement

The form is published by Consumer Affairs Victoria and has six sections.

The Business Operating Report (Section D)

This is the part that takes the time. It covers the last two accounting periods, usually financial years, plus the current year up to the most recent quarter. If you've owned the business for less than two periods, it covers the time you've owned it.

For each period the report shows:

• Total gross income and the average per week.
• Cost of goods sold and gross profit, in dollars and as a percentage.
• Operating expenses, line by line: rent, outgoings, staff wages, superannuation, WorkCover, power, insurance, advertising, repairs and more.
• Net profit for the business.
• The owner's own costs, listed separately: personal expenses, your own finance costs, and wages or super paid to family members.
• Adjusted net profit to the owners.

It also asks what customers owe the business and whether any liabilities run with it, such as a planning ruling or a tax dispute.

The accountant's statement

A practising accountant compares the report with your books of account and signs a statement that the figures are in accordance with them. The form lists who qualifies, including registered company auditors and members of CPA Australia, Chartered Accountants and the Institute of Public Accountants.

The accountant is confirming the figures match your books. They aren't auditing the business or vouching for its future.

When the buyer must receive it

• Before the buyer signs the contract or pays the deposit, whichever comes first.
• The buyer signs Section F to acknowledge they received the completed statement. Keep a copy.
• Keep it current. The current-year figures run to the most recent quarter before you sign. If a sale runs into a new quarter, the figures need updating.

What happens if it's wrong or missing

The form's warning to vendors is plain:

• The buyer can walk away. If the statement is incomplete or inaccurate, the buyer may avoid the contract within three months of signing it, provided they haven't already taken possession. The vendor must then repay what the buyer has paid.
• The same applies if no statement is given at all, or if it isn't in the official form.
• There's a fine for failing to give the statement or giving an incomplete one.

The most common problems are leaving the statement until a buyer asks for it, figures that don't match the accounts, and current-year figures that are a quarter out of date.

How to prepare

1. Work out whether you need one, using the $450,000 test and the liquor licence exemption above.
2. Gather two years of profit and loss statements and this year's figures to the latest quarter.
3. Separate your own costs from the business's: personal expenses, your own finance costs and family wages.
4. Book your accountant early. Their sign-off is usually what holds things up.
5. Have the supporting documents ready. The form tells buyers to ask for your balance sheets, your latest tax assessment and your BAS since the end of the last financial year.

If you're still deciding whether to sell, our guide to preparing your business for sale covers the wider checklist, and a free business appraisal will tell you what buyers are likely to pay.

Frequently asked questions

What is a Section 52 statement?

It's the vendor's statement required by section 52 of Victoria's Estate Agents Act 1980 when a small business is sold. It gives the buyer the trading figures for the last two accounting periods and the current year to date, with an accountant's statement that the figures match the vendor's books.

When is a Section 52 statement required?

When the goodwill, plant, equipment and fittings of a Victorian business are being sold for a total of $450,000 or less. It isn't required for a business that holds a liquor licence and can't lawfully be run without one.

Who prepares a Section 52 statement?

The vendor, usually with their accountant. The vendor signs it, and a practising accountant signs a statement that the financial information is in accordance with the vendor's books.

When must the buyer receive it?

Before the buyer or their representative signs the contract or pays a deposit, whichever happens first.

What if the Section 52 statement is inaccurate?

The buyer may avoid the contract within three months of signing, as long as they haven't taken possession, and the vendor must repay what the buyer has paid.

Thinking of selling?

Want to know what buyers would pay for your business? Request your free, confidential business appraisal or call 03 9918 6739.

This is general information, not legal or accounting advice. Check the current form on the Consumer Affairs Victoria website and speak to your solicitor and accountant about your own sale.