Small Business CGT Concessions

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What are the available Small Business CGT concessions?

There are currently four different ways in which small business operators can qualify for Capital Gains Tax concessions:

  1. The 15-year exemption. Where a taxpayer satisfies the conditions for the 15-year exemption, any capital gain made in relation to the relevant CGT event will be disregarded in whole;
  2. The 50% active asset reduction. The 50% active asset reduction allows a taxpayer to reduce a capital gain by 50%;
  3. The CGT retirement exemption. The CGT retirement exemption allows an individual taxpayer to disregard up to $500,000 of capital gains during a lifetime; and
  4. The CGT small business roll-over. The CGT small business roll-over allows a taxpayer to roll-over a part or all of the balance of a capital gain arising in relation to an active asset.

Small business entities and taxpayers with less than the maximum net asset value test ($6m) are eligible to apply the small business CGT concessions.

It is possible to apply more than one CGT concession and prior year capital losses, however, specific rules apply.

If the circumstances involve the death of an individual, there are special rules which apply to the deceased estate.

If the circumstances involve a marriage breakdown, there are special rules which apply automatically.

If you are unsure whether your business meets the definition of a "small business entity", or whether there may be a reason why the small business CGT concessions may not apply to you, give us a call.

CGT concessions where companies and trusts are involved

Where the taxpayer is a company or trust, the taxpayer is required to have a “significant individual”. An individual is a “significant individual” in a company or trust at a time if, at that time, the individual has a “small business participation percentage” in the company or trust of at least 20% which allows up to 5 taxpayers to benefit from the small business CGT concessions.

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