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The small business rollover allows you to defer the capital gain made from a CGT event if you acquire one or more replacement assets and satisfy certain conditions. If the replacement asset's use changes (for example, you no longer use it in the business or you sell it), or there is a change in circumstances, the deferred capital gain will crystallise, that is, you will make a capital gain equal to the capital gain previously deferred.
You may choose to apply the small business rollover:
- 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 you have applied capital losses, or
- instead of the small business 50% active asset reduction - that is, to the capital gain remaining after you have applied any capital losses and CGT discount. Making this choice might ultimately allow a company or trust to make larger tax-free ETPs under the small business retirement exemption if they choose the retirement exemption after the deferred capital gain has crystallised, for example, when the replacement asset is later sold.
You may instead choose the small business retirement exemption 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