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    Basic conditions

    To qualify for any of the small business capital gains tax (CGT) concessions, there are certain basic conditions that must be satisfied. Follow the steps below to determine whether you satisfy the basic conditions.

    Step 1

    You must first satisfy at least one of the following conditions:

    • you are a small business entity
    • you do not carry on business (other than as a partner) but your asset is used in a business carried on by a small business entity that is your affiliate or an entity connected with you (passively-held assets)
    • you are a partner in a partnership that is a small business entity, and the asset is  
      • an interest in an asset of the partnership (partnership assets)
      • an asset you own (that is not an interest in a partnership asset) that is used in the business of the partnership (partner’s assets), or
    • you satisfy the maximum net asset value test.

    Step 2

    The asset in question must satisfy the active asset test.

    Step 3

    This step only applies if the CGT asset is a share in a company or an interest in a trust. Where this is the case, one of these additional basic conditions must be satisfied just before the CGT event:

    • the entity claiming the concession must be a CGT concession stakeholder in the company or trust, or
    • CGT concession stakeholders in the company or trust together have a small business participation percentage in the entity claiming the concession of at least 90% (the 90% test).
      Last modified: 21 Jun 2016QC 19744