Small Business Capital Gains Tax Concessions (‘CGT’)

Private business groups

Small Business Capital Gains Tax Concessions (‘CGT’)

Are you a small or medium-sized business owner planning to sell your business, property, or shares?

Navigating CGT can be complex – but Nexia Sydney’s team of tax specialists can help you unlock significant tax savings through the Small Business CGT Concessions.

Whether you’re selling a business, a property used in a business, shares or units in an entity carrying on a business, disposing of a part interest in a business asset, restructuring or undertaking succession planning, understanding and applying these concessions can dramatically reduce your tax liability.

In some cases, a capital gain from the disposal of business assets may be entirely exempt from tax.

Home / Tax / Private business groups / Small Business Capital Gains Tax Concessions (‘CGT’)

What Are Small Business CGT Concessions?

The Australian Taxation Office (ATO) offers four powerful CGT concessions for eligible small businesses. These can dramatically reduce, or even eliminate, your tax liability when selling or restructuring ‘active’ business assets.

  1. 15-Year Exemption
    Disregard the entire capital gain if the asset was held for 15 years and the sale is linked to retirement or permanent incapacity.
  2. 50% Active Asset Reduction
    Reduce the capital gain on an asset by 50%, in addition to the general CGT discount.
  3. Retirement Exemption
    Exempt up to $500,000 of capital gains over your lifetime. If you’re under 55, the exempt amount must be contributed to superannuation.
  4. Small Business Rollover
    Defer all or part of a capital gain when you sell an asset and acquire a replacement.

Did you know? More than 1 concession can be applied where the relevant requirements are met.

Let us help you determine the concessions available to you, call us on 02 8264 0755.

Why These Concessions Matter

These concessions can reduce your capital gains tax to nil, saving thousands. They are especially valuable for:

  • Business exits
  • Succession planning
  • Retirement transitions

Are You Eligible?

You may qualify if:

  • Your business has an aggregated turnover under $2 million, or
  • Your aggregated assets are under $6 million (Maximum Net Asset Value test)
  • The asset is an ‘active asset’ used in your business or in a business of an entity connected to you, or in the business of an affiliate of yours.

Additional rules apply for shares, units, and trust interests.

How It Works

Applying the concessions follows a specific order:

  1. Review eligibility to access the concessions – if yes:
  2. Apply the 15-Year Exemption first (if eligible)
  3. Offset any capital losses (if applicable)
  4. Apply the CGT discount (if applicable)
  5. Apply the 50% Active Asset Reduction
  6. Use the Retirement Exemption and/or Rollover to reduce any remaining gain (if eligible/desirable)

A combination of these concessions can be used to maximise your tax relief.

Frequently Asked Questions

Yes, if eligible, you can combine concessions in a specific order.

An example of an active asset is one that is used in the course of running your business, such as a premises, goodwill, or certain shares.

The MNAV test is one of the basic eligibility criteria for small business CGT concessions. It requires that the total net value of your business, connected entities’ and affiliates’ assets is less than $6 million (excluding certain assets like your home, superannuation, and personal use assets). If you meet this test, you may qualify for the concessions.

You only need to meet one of the basic conditions – either the turnover test, where aggregated turnover is under $2 million (which includes the turnover of connected entities and affiliates) or the $6 million MNAV test – to qualify for the small business CGT concessions.

You must contribute the exempt amount (up to $500,000) into a complying superannuation fund.

No, the gain is deferred until the replacement asset is sold or its use changes.

Need Help Navigating the Rules?

Our specialist team will guide you through eligibility, documentation, and strategic planning to maximise your tax relief.

We work directly with business owners or through accountants to deliver advice.

 

 

Book your complimentary consultation today:

Phone 02 8264 0755 to book an initial complimentary consultation with Sean Urquhart or Amy Waterhouse.

Or click ‘view resource’ below to contact your preferred Advisor. 

Contact Sean Urquhart

Sean Urquhart is a Director in the Taxation Consulting division at Nexia Sydney and a Chartered Tax Adviser with over 29 years of experience. He has specialist expertise in small business Capital Gains Tax (CGT) concessions, providing strategic advice to a diverse range of clients navigating complex CGT matters.

View resource
Contact Amy Waterhouse

Amy Waterhouse is an Associate Director in the Tax Consulting team at Nexia Sydney and is a qualified Chartered Tax Adviser in both Australia and the UK. She regularly advises on the small business Capital Gains Tax (CGT) concessions in conjunction with Sean.

View resource