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  • Basic conditions for the small business CGT concessions

    To qualify for the four small business capital gains tax (CGT) concessions, you must satisfy several conditions that are common to all the concessions. These are called the ‘basic conditions’.

    Most of the concessions also have further requirements that you must satisfy for the specific concession to apply.

    Follow the steps below to determine whether you satisfy the basic conditions.

    These conditions do not apply to the small business restructure rollover, which is not one of the four CGT concessions and has different eligibility criteria – for example, it has a higher turnover limit.

    Step 1

    You must first satisfy one of the following:

    • you're a small business entity with an aggregated turnover of less than $2 million
    • you don't carry on business (other than as a partner) but your CGT asset is used in a business carried on by a small business entity that is your affiliate or an entity connected with you (passively-held assets)
    • you're a partner in a partnership that is a small business entity, and the CGT asset is:
      • an interest in a partnership asset (partnership assets), or
      • an asset you own that is not an interest in a partnership asset (partner's assets) but is used in the business of the partnership
       
    • you satisfy the maximum net asset value test.

    Step 2

    The asset in question must satisfy the active asset test.

    Step 3

    This step is only applicable if the CGT asset is a share in a company or interest in a trust.

    Where this is the case, one of these additional basic conditions must be satisfied just before the CGT event:

    • the entity claiming the concession must be a CGT concession stakeholder in the company or trust
    • CGT concession stakeholders in the company or trust together have a small business participation percentage in the entity claiming the concession of at least 90% (the 90% test).

    See also:

    Last modified: 17 Jul 2017QC 52266