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You may choose to disregard all or part of a capital gain under the small business retirement exemption if you satisfy certain conditions.
This concession interacts with the eligible termination payment (ETP) provisions. Broadly, it requires amounts to be paid (rolled over) into a complying superannuation fund, a complying approved deposit fund or a retirement savings account under the ETP provisions if the recipient is younger than 55.
You may choose to apply the small business retirement exemption:
- after the small business 50% active asset reduction - that is, to the remaining 50% (or if the CGT discount has also applied, the remaining 25%) of the capital gain after capital losses have been applied, or
- instead of the small business 50% active asset reduction - that is, to the capital gain that remains after you have applied any CGT discount and capital losses. Making this choice might allow a company or trust to make larger tax-free ETPs under the small business retirement exemption.
You may instead choose the small business rollover if its conditions are satisfied or you may choose both concessions for different parts of the remaining capital gain.
Last modified: 10 Sep 2007QC 27357