• Active assets and active asset test

    Prior to 1 July 2006

    From 1 July 2006

    From 1 July 2007

    From 1 July 2009

    This test required the asset to be active for the lesser of half the period of ownership or 7½ of the last 15 years. It also required the asset to be active just before the capital gains tax (CGT) event.

    This test requires the asset to be active for the lesser of 7½ years or half of the period of ownership. The asset does not need to be an active asset just before the CGT event.

    No change to the time period that the asset must be active.

    An asset of an individual used or held ready for use in, or inherently connected with, the business of a spouse or child under 18 years is taken to be an active asset.

    No change

    Small business CGT affiliate includes a spouse and child under 18 years. This is relevant for working out whether an asset is an active asset in situations where an asset is used by the spouse or child in their business.

    No change

    A spouse and child under 18 years are not automatically affiliates. However a spouse or child under 18 years may be taken to be an affiliate of an individual in certain circumstances so that the asset can qualify as an active asset.

    No change

    An 80% look-through test is applied to the active assets of the company or trust to determine whether shares in a company or interests in a trust qualify as active assets. Certain cash and financial instruments inherently connected with the business were not counted towards the 80% requirement.

    Cash and financial instruments inherently connected with the business are now counted towards the 80% requirement.

    No change

    No change

    Theoretically, the 80% test needed to be monitored on a continuous basis.

    This test does not have to be met in circumstances where it is reasonable to conclude that the 80% test has been passed.

    No change

    No change

    This test could be failed for a temporary breach — this could result in a capital gain being realised.

    This test is not failed because of a breach of the threshold that is only temporary in nature.

    No change

    No change

      Last modified: 21 Jun 2016QC 21145