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Basic conditions

Last updated 29 March 2021

To qualify for the small business rollover, you need to satisfy the basic conditions that apply to all the CGT small business concessions. You can choose to obtain a rollover even if you have not yet acquired a replacement asset or incurred expenditure on a capital improvement to an existing asset.

Example: small business rollover

Instead of choosing the retirement exemption, Lana decides that she will search for a suitable replacement asset to use in her business. As she meets all basic conditions, she qualifies for the small business rollover.

This means she can reduce her capital gain remaining after all other concessions have applied ($3,500) to nil.

After six months, Lana acquires another small parcel of land immediately adjoining the main business premises to use in her business. The replacement land costs $10,000, and it was her active asset before the end of the replacement asset period, so she meets the further conditions.

The $3,500 remaining capital gain disregarded under the small business rollover is only a deferral of the capital gain. This deferred capital gain may later become assessable if Lana:

  • sells the land
  • stops using it in her business.

However, she could then choose a further small business rollover if she acquired another replacement active asset. Alternatively, Lana could choose the retirement exemption.

End of example