Small business concessions

There are four small business capital gains tax (CGT) concessions that may apply to capital gains from active assets.

  • The small business 15-year exemption, subject to certain conditions being satisfied, means a capital gain is totally disregarded if your small business entity has continuously owned the CGT asset for at least 15 years, and  
    • you are 55 years old or over and retiring, or
    • you are permanently incapacitated.
  • The small business 50% active asset reduction provides a 50% reduction of a capital gain for an active asset.
  • The small business retirement exemption allows capital gains for active assets (up to a lifetime limit of $500,000) to be disregarded if the conditions are satisfied. If you are under 55 years old and are eligible for this exemption, the amount must be paid into a superannuation (or similar) fund.
  • The small business rollover enables you to defer all or part of a capital gain if a replacement asset is acquired, or a capital improvement is made to an existing asset, and other conditions are satisfied.

To find out if your business is eligible for the small business CGT concessions, see Capital gains tax concessions for small business.

Active assets

Remember that at the item active assets in the CGT summary worksheet (and the CGT schedule), you should only include a capital gain from an active asset that qualifies for one or more of the following small business CGT concessions:

  • small business 50% active asset reduction
  • small business retirement exemption, or
  • small business rollover.

If the asset does not qualify for one or more of these concessions, include the capital gain at the item 'non-active assets'.

Limit on value of assets

Where the turnover of your entity and related entities exceeds $2 million, the small business CGT concessions are only available if the net value of the assets of your entity and related entities just before the CGT event do not exceed $6 million. If you are not entitled to the small business concessions, include the capital gain at 'non-active assets'.

Life insurance companies

Life insurance companies, including friendly societies that conduct life insurance business, need to complete two CGT summary worksheets – one for each class of income they derived (superannuation class and ordinary class income). Capital losses from one class of income can only be applied against capital gains from that class of income. Combine the details from both summary worksheets onto one CGT schedule, if it is required.

    Last modified: 21 Jun 2016QC 16983