Introduction to capital gains tax

Small business CGT concessions

In addition to the exemptions and rollovers available more widely, the following concessions may allow you to disregard or defer some or all of a capital gain from an active asset that you use in your small business:

• 15-year exemption
• 50% active asset reduction
• retirement exemption
• rollover.

To use the concessions you must first satisfy the basic conditions that apply to all four concessions, and then satisfy any conditions that apply specifically to a particular concession.

You can apply as many concessions as you are entitled to until the capital gain is reduced to nil, enabling you to achieve the best tax result for your circumstances.

There are rules about the order you apply the CGT small business concessions, any current year or prior year capital losses and the CGT discount.

For more information about the conditions that need to be satisfied, refer to Capital gains tax (CGT) concessions for small business - overview.

Make sure you refer to information relating to the appropriate income tax year as there have been several changes to the CGT concessions for small business since 2006.

15-year exemption

If your business has continuously owned an asset for 15 years and you are aged 55 years or over and are retiring or are permanently incapacitated, you won't have an assessable capital gain when you sell the active asset.

For more information, refer to 15-year exemption - capital gains tax concession for small business.

50% active asset reduction

You can reduce the capital gain on an active asset by 50%. This is in addition to the 50% CGT discount if you have owned the asset for 12 months or more.

For more information, refer to 50% active asset reduction - capital gains tax concession for small business.

Retirement exemption

Capital gains from the sale of active assets are exempt up to a lifetime limit of $500,000. If you are under 55 years of age, the exempt amount must be paid into a complying super fund or a retirement savings account.

For more information, refer to Retirement exemption - capital gains tax concession for small business.

Rollover

If you sell an active asset, you can defer your capital gain until another CGT event happens that crystallises the gain. For example, you don't acquire a replacement asset within the required period (two years), or you sell the replacement asset or stop using it in your business. When a CGT event crystallises a previously deferred gain, all or part of the gain becomes assessable.

For more information, refer to Roll over - capital gains tax concession for small business.

For more information on the CGT concessions for small business, refer to: Capital gains tax (CGT) concessions for small business - overview Guide to capital gains tax concessions for small business Advanced guide to capital gains tax concessions for small business.

Capital gains tax - home

Sections within CGT exemptions, rollovers and concessions

• Exemptions
• Rollovers
• Small business CGT concessions