Company and trust exemption

Under section 152-110External Link a company or trust may disregard a capital gain arising from a CGT event if all of the following conditions are satisfied:

  • The basic conditions in Subdivision 152-AExternal Link are met.
  • The entity continuously owned the CGT asset for the 15 year period ending just before the CGT event.
  • The entity had a significant individual for a total of at least 15 years during which the entity owned the asset.
  • The person who was a significant individual of the company or trust just before the CGT event was either
    • 55 years old or older at that time and the event happened in connection with the person's retirement
    • permanently incapacitated at that time.

The capital proceeds that qualify for the exclusion from non-concessional contributions are limited to the significant individual's share of the capital proceeds. There are rules about the timing of the payment.

Example: CGT exemption

Ruth, 59 years old, sells an active asset used in her small business that she had owned continuously for over 15 years in 2011-12. The proceeds from the sale are $1.1 million.

She qualifies for the CGT exemption in Subdivision 152-B and disregards the capital gain of $390,000 on this basis.

Ruth would like to contribute the entire proceeds ($1.1 million) to her super fund.

Assuming Ruth has not previously made any contributions or used her CGT cap, she may elect to contribute the entire $1.1 million under the cap exemption.

End of example
    Last modified: 22 Nov 2013QC 34181