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Complying superannuation funds and the concessions

Last updated 29 June 2009

Concessions not available for complying superannuation funds

The small business concessions will not be available for any capital gain a complying superannuation fund makes on the sale of an asset used in a 'related' entity's business.

It may be common for a complying superannuation fund to own premises used in the business of a 'related' entity (for example, business real property). However, as the members or trustees of the fund (who typically also control the 'related' entity) do not control the fund in the manner required, the related entity is not a connected entity and, therefore, the business real property is not an active asset.

Interaction with superannuation

There is considerable interaction between the retirement exemption and superannuation.

Immediate payment to superannuation fund required

The retirement exemption requires amounts to be immediately contributed into a complying superannuation fund or a retirement savings account if the recipient is younger than 55 when they make a choice to use the retirement exemption. This is an important requirement. Failure to immediately pay the amount to superannuation (or similar) fund will mean the conditions are not satisfied and the retirement exemption will not be available (for more information see: Small business retirement exemption).

Payments deemed to be for termination of employment

Where a company or trust makes use of the retirement exemption, the amounts may be paid to CGT concession stakeholder(s) who are employees or non employees. Such a payment made to a CGT concession stakeholder who is an employee is deemed to be in consequence of the termination of employment (for deemed dividend purposes), however it is not necessary for the person to actually terminate their employment if they choose the retirement exemption. There are no such implications for CGT concession stakeholders who are not employees.

For the 2006-07 year such a payment was deemed to be an ETP made in consequence of the termination of employment of the CGT concession stakeholder. This applied regardless whether the CGT concession stakeholder was actually an employee or not, however employees were not required to terminate their employment. The law has been amended to abolish RBLs and limit the significance of ETPs from the beginning of the 2007-08 income year.