12 July 2017

Small business CGT concessions

As a small business, you may be eligible for the following capital gains tax (CGT) concessions on assets used to conduct your business. We call these ‘active assets’.

In addition to the exemptions and rollovers available more widely, the following concessions may allow you to disregard or defer some or all of a capital gain from an active asset used in a small business:

CGT 15-year asset exemption If you are aged 55 or older and retiring or are permanently incapacitated, and you have owned an active business asset for at least 15 years, you won’t pay CGT when you dispose of the asset by sale, gift or transfer.
CGT 50% active asset reduction If you have owned an asset to conduct your business you will only pay tax on 50% of the capital gain when you sell the asset. For individuals (including partners in partnerships and beneficiaries of trusts), this reduction applies in addition to the standard* 50% CGT discount, thereby reducing the taxable amount to 25% of the capital gain.
CGT retirement exemption There is a CGT exemption on the sale of an active business asset, up to a lifetime limit of $500,000. If you are under 55, money from the disposal of the asset must be paid into a complying superannuation fund or a retirement savings account.
CGT rollover If you sell a small business asset and buy a replacement, you can roll over your CGT liability to the value of the replacement asset. This means you won’t pay any CGT owing until you sell the replacement asset.

Evans & Hearn is here to help, for more information please contact our office or refer to the ATO’s web site for more information on Small business CGT concessions.