Small business CGT concessions
Four concessions that can dramatically reduce or eliminate capital gains tax when selling a business.
Eligible small businesses can access four concessions: the 15-year exemption, the 50% active asset reduction, the retirement exemption, and the small business rollover. They can be applied in combination.
Access generally requires aggregated turnover under $2 million or net assets under $6 million, and the asset must be an active asset used in the business.
The 15-year exemption is the most valuable. Owning an active asset for fifteen years and selling in connection with retirement after 55 can exempt the entire gain, with proceeds able to flow into super under separate caps.
Stacking the concessions
A $1 million gain can be reduced by the general 50% CGT discount, then the 50% active asset reduction, then the retirement exemption — potentially reducing the taxable amount to nil.
The bit people get wrong
The eligibility tests are intricate and unforgiving, particularly around what counts as an active asset and how connected entities are aggregated. This is one area where getting advice well before a sale is essential.
Common questions
Who qualifies as a small business?
Broadly, aggregated turnover under $2 million or net CGT assets under $6 million, with the asset satisfying the active asset test.
Can I put the proceeds into super?
Yes. Amounts covered by the 15-year exemption or retirement exemption can be contributed under a separate lifetime CGT cap, outside the usual contribution caps.
Does the family home count?
No. These concessions apply to active business assets, not to passive investments or your residence, which has its own exemption.
Run your own numbers