Advanced guide to capital gains tax concessions for small business 2009-10

CGT concession stakeholder

An individual is a CGT concession stakeholder of a company or trust if they are a significant individual or the spouse of a significant individual where the spouse has a small business participation percentage in the company or trust at that time that is greater than zero.

This participation percentage can be held directly or indirectly through one or more interposed entities.

The percentages are worked out in the same way as for the significant individual test.

Example

There are 100 issued shares in Company X, all with equal voting, dividend and distribution rights. Joe owns 99 shares and his wife Anne owns one share. Joe is a significant individual in the company. Anne is Joe's spouse and because she owns a share in the company, she has a small business participation percentage in the company greater than zero. They are, therefore, both CGT concession stakeholders. Anne and Joe may be entitled to the small business concessions when they sell their shares.

If a company or trust has claimed the small business 15-year exemption or the small business retirement exemption, a CGT concession stakeholder may receive an exempt amount from the company or trust if the conditions are satisfied.

Sections within Basic conditions for the small business CGT concessions

• Small business entity
• Working out if you are a small business entity
• Passively-held assets
• Partner in a partnership - using the small business entity test
• Businesses that are winding up
• Maximum net asset value test
• Who an affiliate is
• When an entity is connected with you
• Active asset test
• Additional conditions if the CGT asset is a share or trust interest
• CGT concession stakeholder
• Significant individual test
• The 90% test