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Concessions not available for complying superannuation funds
The small business concessions will not be available for any capital gain a complying superannuation fund makes on the sale of an asset used in a 'related' entity's business.
It may be common for a complying superannuation fund to own premises used in the business of a 'related' entity - for example, business real property. However, as the members or trustees of the fund (who typically also control the 'related' entity) do not control the fund in the manner required, the related entity is not a connected entity and, therefore, the business real property is not an active asset.
Interaction with superannuation
There is considerable interaction between the retirement exemption and superannuation.
Immediate payment to superannuation fund required
The retirement exemption requires amounts to be immediately contributed into a complying superannuation fund or a retirement savings account if the recipient is younger than 55 years old when they make a choice to use the retirement exemption. This is an important requirement - failure to immediately pay the amount to a superannuation (or similar) fund will mean the conditions are not satisfied and the retirement exemption will not be available.
For more information, see Small business retirement exemption.
Payments for termination of employment
Where a company or trust makes use of the retirement exemption, the amounts may be paid to CGT concession stakeholders who are employees or non-employees. Such a payment made to a CGT concession stakeholder who is an employee is deemed to be in consequence of the termination of employment (for deemed dividend purposes).
However, it is not necessary for the person to actually terminate their employment if they choose the retirement exemption. There are no such implications for CGT concession stakeholders who are not employees. For more information see Deemed dividends.
Payments of amounts exempted under the retirement exemption to a CGT concession stakeholder who is an employee are no longer deemed to be in respect of their termination of employment. This applies to payments made on or after 23 June 2009. Such payments also ceased to be treated as eligible termination payments (ETP) from 2007-08.
For the 2006-07 and prior years, such a payment was deemed to be an ETP made in consequence of the termination of employment of the CGT concession stakeholder. This applied regardless of whether the CGT concession stakeholder was actually an employee or not. However, employees were not required to terminate their employment. The law has been amended to abolish reasonable benefit limits (RBLs) and limit the significance of ETPs from the beginning of the 2007-08 income year.