Advanced guide to capital gains tax concessions for small business 2010-11

CGT discount

If you are a company, this section does not apply to you and you cannot use the CGT discount.

Otherwise, if you made a capital gain in the 2010-11 income year from a CGT asset that you acquired before 11.45am on 21 September 1999 you may choose to index the cost base (frozen at 30 September 1999) or apply the CGT discount if certain conditions are satisfied.

Where we refer to 'after 11.45am on 21 September 1999' we are referring to after 11.45am, by legal time in the Australian Capital Territory, on 21 September 1999.

Indexation is not available for assets acquired after 11.45am on 21 September 1999, but the CGT discount may apply if the relevant conditions are met.

The discount reduces a capital gain made by individuals (including partners in partnerships) and trusts by 50%. The discount for complying superannuation funds is 33 1/3%. Companies are ineligible for the CGT discount.

There are further rules for beneficiaries receiving trust distributions who are entitled to a share of a trust capital gain. For more information see 'Trust distributions' in part A of the Guide to capital gains tax 2010-11 (NAT 4151).

You reduce your capital gain in the following sequence. First you offset capital losses against capital gains. Then you apply:

• the small business 15-year exemption if applicable
• the CGT discount
• the small business CGT concessions.
• The main condition for the CGT discount is that you must have acquired the CGT asset at least 12 months before the CGT event giving rise to the capital gain. There are rules to prevent circumvention of the 12-month requirement. Certain CGT events, such as where new assets are created, do not qualify for the CGT discount because the 12-month rule would not be satisfied.

The CGT discount can apply to capital gains made on non-business assets as well as business assets.

Sections within About CGT concessions

• CGT discount
• Small business concessions