Small Business
CGT Concessions
The four small business CGT concessions (Division 152) offer potentially significant relief from capital gains tax on the disposal of active assets — but eligibility is complex and the concessions must be applied in the correct order.
The four small business
CGT concessions
The small business CGT concessions provide potentially substantial relief from CGT on the disposal of active assets used in a business. There are four concessions, each with its own eligibility requirements — and applying them in the wrong order, or failing to satisfy threshold conditions, can mean they are unavailable entirely.
15-Year Exemption
A complete exemption from CGT for assets held for at least 15 years continuously. The individual must be 55+ and retiring, or permanently incapacitated. The most valuable concession — it eliminates the gain entirely.
50% Active Asset Reduction
A 50% reduction of the capital gain on the disposal of an active asset. Combined with the general 50% CGT discount (for assets held 12+ months), the effective tax rate can be substantially reduced.
Retirement Exemption
A lifetime exemption of up to $500,000 per individual on capital gains from active assets. Amounts contributed to superannuation if under 55, or retained if 55+. Does not require actual retirement. Must be applied in writing.
Rollover
Deferral of the capital gain for up to two years where proceeds will be used to acquire a replacement active asset or improve an existing one. Provides time flexibility after a sale.
Basic eligibility conditions: The taxpayer must either be a small business entity (aggregated turnover under $10 million), or have net assets below $6 million. The asset must be an active asset and a threshold percentage test must be satisfied where the asset is held by a company or trust. The concessions must be applied in the correct order — each affects the base amount on which subsequent concessions are calculated.
Maximising small business CGT concessions on a sale?
The concessions must be applied in the right order and on the right facts. Get specialist advice before settlement.