Small Business CGT Concessions

The small business CGT concessions are a suite of four concessions that can significantly reduce or eliminate CGT for eligible small business owners when they sell active business assets. To qualify, you must have an aggregated turnover of less than $2 million, or net CGT assets of no more than $6 million. The asset being sold must be an "active asset" — one used in or connected with a business.

The four concessions are: (1) the 15-year exemption — if you've owned the asset for 15+ years and are retiring or permanently incapacitated, the entire gain is exempt; (2) the 50% active asset reduction — reduces the capital gain by 50%, on top of the individual 50% CGT discount (potentially reducing the taxable gain to 25%); (3) the retirement exemption — up to $500,000 lifetime of capital gains can be exempt (must go into super if you're under 55); and (4) the small business rollover — allows you to defer the gain for up to 2 years (or longer if you acquire a replacement asset).

These concessions can be applied in combination and in any order to minimise tax. For example, a small business owner selling a business asset held for more than 12 months could apply the individual 50% CGT discount, then the 50% active asset reduction, and finally the retirement exemption — potentially paying zero CGT on the sale. These concessions are among the most generous in the Australian tax system.