Selling Businesses
Small Business CGT Concessions
The following four CGT concessions are available
only for small business.
-
The small business 15-year
exemption provides a total exemption for a capital gain on a CGT
asset if you have continuously owned the asset for at least 15 years
and the relevant individual is 55 or over and retiring, or is
permanently incapacitated.
-
The small business 50% active
asset reduction provides a 50% reduction of a capital gain.
-
The small business retirement
exemption provides an exemption for capital gains up to a lifetime
limit of $500,000. If the individual is under 55 just before they
make the choice, the amount must be paid into a superannuation (or
similar) fund.
-
The small business rollover
provides a deferral of all or part of a capital gain if a
replacement asset is acquired, or an improvement is made to an
existing asset by the end of two years after the capital gain was
made. However, you may make a capital gain equal to the deferred
gain if the replacement or improved asset is disposed of or its use
changes in particular ways. In this case, the deferred capital gain
is in addition to any capital gain made when the replacement or
improved asset is disposed of.
Note that to qualify for any of the
small business CGT concessions, you must first satisfy several basic
conditions:
-
the maximum net asset value
test;
-
the active asset test; and
-
if the CGT asset is a share in
a company or an interest in a trust, 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
- the 90 per cent test.
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