Changes to the capital gains tax concessions for small business received royal assent on 23 June 2009 and are contained in Tax Laws Amendment (2009 Measures No. 2) Act 2009External Link.
Some of these changes apply retrospectively to CGT events happening in 2006-07 and later income years, and include:
- increased access to the concessions for joint tenants and trustees of testamentary trusts where a gain arises from an asset within two years of the individual's death, where the deceased would have been entitled
- removal of the requirement in the retirement exemption to meet the basic conditions where the replacement asset conditions have not been met for the small business roll-over (CGT events J5 and J6).
As these changes are retrospective, taxpayers have additional time to make their choice to use the concessions where they become eligible as a result of these June 2009 amendments. The extension of time to make a choice applies to CGT events happening before the 23 June 2009.
The taxpayer has until the later of:
- the day the entity lodges its income tax return for the income year in which the relevant CGT event happened
- 12 months after the day on which these amendments receive royal assent, or
- a later day allowed by the Commissioner.
For more information about the changes, see
- Capital gains tax (CGT) concessions for small business - more changes for the 2007-09 years
- Advanced guide to capital gains tax concessions for small business 2008-09
The government announced in the Treasurer's Press Release No.38 of 2006 (9 May 2006) it would make a number of amendments to the small business CGT concessions. These amendments were in response to the recommendations of the Board of Taxation, which conducted a post-implementation review of the concessions. The amendments are included in Tax Laws Amendment (2006 Measures No.7) Act 2007 which received royal assent on 12 April 2007.
These changes apply to CGT events that happen from the beginning of the 2006-07 income year, and are incorporated in this guide.
As part of the government's broader superannuation changes, certain consequential amendments were made to the retirement exemption by the Superannuation Legislation Amendment (Simplification) Act 2007. Most of those amendments were to apply to CGT events happening in the 2007-08 and later income years. However, if further amendments in Tax Laws Amendment (2007 Measures No.4) Bill 2007 are passed by Parliament, most of the amendments will apply after 30 June 2007, regardless of when the relevant CGT event occurred. Other amendments will apply to CGT events that happened in the 2006-07 and later income years. These changes are not yet incorporated in this guide.
The government is also proposing changes to the law which will make it easier for small business to claim tax concessions from July 2007.
Small businesses with turnover of up to $2 million a year will be eligible to claim a range of tax concessions, and be able to pick and choose which ones best suit their business. This includes the capital gains tax concessions for small business.
The changes also mean that businesses with a turnover greater than $2 million can access the capital gains tax concessions for small business as long as they satisfy the net asset test which has increased to $6 million. These businesses must, however, satisfy certain conditions.
These proposed changes will apply to CGT in the 2007-08 financial year and beyond.