There are four small business CGT concessions available, namely:
- the small business 15-year exemption
- the small business 50% active asset reduction
- the small business retirement exemption, and
- the small business rollover.
These concessions may apply to CGT events (for example, the disposal of a CGT asset) that happen after 11.45am on 21 September 1999. Any capital gain that results from a CGT event may be reduced or disregarded under the small business concessions if you satisfy certain conditions.
The small business 15-year exemption provides a total exemption of a capital gain if you have continuously owned the CGT asset for at least 15 years and the relevant individual is aged 55 or over and retiring, or is permanently incapacitated.
The small business 50% active asset reduction provides a 50% reduction of a capital gain.
The small business retirement exemption provides an exemption of capital gains up to a lifetime limit of $500,000. If the recipient is under 55 years of age, the amount must be paid into a superannuation (or similar) fund.
The small business rollover provides a deferral of a capital gain if a replacement asset is acquired. The deferred capital gain may later crystallise if the replacement asset is disposed of or its use changes in particular ways. This means you would make a capital gain equal to the deferred gain (in addition to any capital gain made on the disposal of the replacement asset - see the example).