Company and trust exemption
Under section 152-110External Link a company or trust may disregard a capital gain arising from a CGT event if all of the following conditions are satisfied:
- The basic conditions in Subdivision 152-AExternal Link are met.
- The entity continuously owned the CGT asset for the 15 year period ending just before the CGT event.
- The entity had a significant individual for a total of at least 15 years during which the entity owned the asset.
- The person who was a significant individual of the company or trust just before the CGT event was either
- 55 years old or older at that time and the event happened in connection with the person's retirement
- permanently incapacitated at that time.
The capital proceeds that qualify for the exclusion from non-concessional contributions are limited to the significant individual's share of the capital proceeds. There are rules about the timing of the payment.
Example: CGT exemption
Ruth, 59 years old, sells an active asset used in her small business that she had owned continuously for over 15 years in 2011-12. The proceeds from the sale are $1.1 million.
She qualifies for the CGT exemption in Subdivision 152-B and disregards the capital gain of $390,000 on this basis.
Ruth would like to contribute the entire proceeds ($1.1 million) to her super fund.
Assuming Ruth has not previously made any contributions or used her CGT cap, she may elect to contribute the entire $1.1 million under the cap exemption.
End of example