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CGT when Selling a Business

Small Business Capital Gain Tax Concessions

The following four CGT concessions are available only for small business.

  1. 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.
  2. The small business 50% active asset reduction provides a 50% reduction of a capital gain.
  3. 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.
  4. 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.

Our dedicated team can assist you with issues relating to how Capital Gains Tax can affect selling a business. Complete and submit the express enquiry form or call us on+61 2 9223 9166 to arrange an appointment.

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The Quinn Group operates Quinn Consultants, Quinn Lawyers, Quinn Financial Planning and Quinn Financial Solutions. The Quinn Group provides related information in regard to legal, accounting and financial planning issues. Liability limited by a scheme approved under Professional Standards Legislation* *other than for the acts or omissions of financial services licensees.