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  • Improving the small business capital gains tax concessions

    On 9 May 2017 the Government announced that it would amend the small business capital gains tax (CGT) concessions to ensure that they can only be accessed in relation to assets used in a small business or ownership interests in a small business.

    The concessions assist owners of small businesses by providing relief from CGT on assets related to their business, as well as contribute to their retirement savings through the sale of the business. However, some taxpayers are able to access these concessions for assets which are unrelated to their small business, for instance through arranging their affairs so that their ownership interests in larger businesses do not count towards the tests for determining eligibility for the concessions.

    The small business CGT concessions will continue to be available to small business taxpayers with aggregated turnover of less than $2 million or business assets less than $6 million.

    Legislation to give effect to this change received Royal Assent on 3 October 2018. The changes will apply to CGT events happening on or after 8 February 2018.

    Administrative Treatment

    Taxpayers who have already lodged their 2017–18 income tax return, with CGT events that occurred on or after 8 February 2018, affected by this change will need to review their position.

    Where an amendment is required no tax shortfall penalties will be applied and any interest accrued will be remitted to the base interest rate up to 3 October 2018. In addition, any interest in excess of the base rate accruing after the date of enactment will be remitted where taxpayers actively seek to amend assessments within a reasonable timeframe after enactment.

    See Administrative Treatments for further information.

    Legislation and supporting material

    The Treasury Laws Amendment (Tax Integrity and Other Measures) Bill 2018External Link received Royal Assent on 3 October 2018.

    The exposure draft legislation and explanatory materialExternal Link were released for consultation on 8 February 2018. Submissions closed on 28 February 2018.

      Last modified: 22 Oct 2018QC 52004