Changes to the capital gains tax concessions for small business received royal assent on 23 June 2009 and are contained in Tax Laws Amendment (2009 Measures No 2) Act 2009External Link.
The following amendments apply to CGT events happening in 2007-08 and later income years. The changes increase access to the small business capital gains tax (CGT) concessions for businesses with turnover less than $2 million via the small business entity test for:
- taxpayers owning a CGT asset used in a business by an affiliate or connected entity (passively held assets)
- partners owning a CGT asset used in the partnership business (partner's assets).
Other minor changes improve the operation of the concessions by:
- increasing the circumstances and purposes for which a spouse or child under 18 years is taken to be an individual's affiliate
- removing unintended consequences for the retirement exemption by correcting the treatment of capital proceeds received in instalments.
Some of the amendments apply retrospectively to CGT events happening in 2006-07 and later income years, and include:
- increased access to the concessions for joint tenants and trustees of testamentary trusts where a gain arises from an asset within two years of the individuals death, where the deceased would have been entitled
- removal of the requirement in the retirement exemption to meet the basic conditions where the replacement asset conditions have not been met for the small business roll-over (CGT events J5 and J6).
As these changes are retrospective, taxpayers have additional time to make their choice to use the concessions where they become eligible as a result of these June 2009 amendments. The extension of time to make a choice applies to CGT events happening before the 23 June 2009.
The taxpayer has until the later of:
- the day the entity lodges its income tax return for the income year in which the relevant CGT event happened
- 12 months after the day on which these amendments receive royal assent, or
- a later day allowed by the Commissioner.
For more information about the changes, see:
- Capital gains tax (CGT) concessions for small business - more changes for the 2007-09 years
- Advanced guide to capital gains tax concessions for small business 2008-09.
On 13 November 2006 the Treasurer and the Minister for Small Business and Tourism announced that the government would introduce a package of measures to help small businesses by improving the alignment of eligibility thresholds for small business concessions, including the small business capital gains tax (CGT) concessions. The amendments are contained in Tax Laws Amendment (Small Business) Act 2007 which received royal assent on 21 June 2007.
These changes apply to CGT events that happen from the beginning of the 2007-08 income year, and are incorporated in this guide.
As part of the government's broader superannuation changes, certain consequential amendments have also been made to the retirement exemption by the Superannuation Legislation Amendment (Simplification) Act 2007 and the Tax Laws Amendment (2007 Measures No. 4) Act 2007.
These amendments apply from 1 July 2007, but also apply to CGT events happening before this date, where the choice to use the retirement exemption is made on or after 1 July 2007. The amendments have been incorporated in this guide.