Small business CGT concessions

In addition to the exemptions and rollovers available more widely, the following concessions may allow you to disregard or defer some or all of a capital gain from an active asset used in a small business:

The concessions are available when you dispose of an active asset and any of the following apply:

  • you're a small business (that is, have an aggregated annual turnover of less than $2 million)
  • your asset was used in a closely connected small business
  • you have net assets of no more than $6 million (excluding personal use assets including your home to the extent that it has not been used to produce income).

The concessions can also apply when you dispose of shares in a company or units in a trust that meet certain criteria.

You can apply as many concessions as you are entitled to until the capital gain is reduced to nil.

There are rules about the order in which you apply the CGT small business concessions, any current year or prior year capital losses and the CGT discount.

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15-year exemption

If your business has continuously owned an active asset for 15 years and you're aged 55 years or over and are retiring or are permanently incapacitated, you won’t have an assessable capital gain when you sell the active asset.

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50% active asset reduction

You can reduce the capital gain on an active asset by 50%. This is in addition to the 50% CGT discount if you've owned the asset for 12 months or more.

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Retirement exemption

Capital gains from the sale of active assets are exempt up to a lifetime limit of $500,000. If you're under 55 years of age, the exempt amount must be paid into a complying super fund or a retirement savings account.

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If you sell an active asset, the small business rollover allows you to defer all or part of a capital gain for two years, or longer if you acquire a replacement asset or you incur expenditure on making capital improvements to an existing asset.

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Last modified: 18 Feb 2016QC 22165