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Claim the small business CGT concessions

We will tell you which of the small business CGT concessions you qualify for, and what it takes to keep them.

The tax on a business sale is often the largest single cost in it, and it is decided long before the contract. Four concessions exist for eligible small businesses, and used together they can reduce a capital gain substantially or remove it altogether. Eligibility turns on tests about turnover, net assets, how the asset has been used and who owns what. Those facts are set by your structure, and the structure is hard to change once a sale is in motion. We work out where you stand while it still matters.

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A straight answer on eligibility

You are told which concessions you qualify for, including where the answer is no.

The best combination, not the first

The concessions are modelled together, because the order they are applied in changes the result.

A sale built around the position

The transaction documents support the concession claimed rather than undermining it.

What are the small business CGT concessions?

They are four measures in the Income Tax Assessment Act 1997 (Cth) (the Act). Each reduces or defers the capital gain on the sale of an active business asset. The 15-year exemption can remove the gain entirely. The 50% active asset reduction halves it. The retirement exemption can exempt a further amount up to a lifetime limit. The rollover defers the gain where you buy a replacement asset.

To use any of them you first have to pass the basic conditions. In broad terms, your business must be small enough on either a turnover or a net asset test. The asset must also be an active one used in the business. Selling shares or units adds a further layer of conditions about who really owns and controls the entity. The concessions can be combined, and the order they are applied in changes the result.

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Do I qualify for the small business CGT concessions?

You have to pass the basic conditions first. In broad terms your business must be small enough under either a turnover test or a net asset test. The asset being sold must be an active asset used in the business. Selling shares or units adds further conditions about ownership and control.

What is the 15-year exemption?

It is the most valuable of the four. It applies where you have owned the active asset continuously for at least fifteen years. You also have to be aged 55 or over and retiring, or permanently incapacitated. The whole capital gain can then be disregarded. The conditions are strict and each one has to be met.

Can I put the proceeds into superannuation?

The retirement exemption allows an exempt amount up to a lifetime limit, and where you are under 55 that amount must be paid into superannuation. Separate caps apply to those contributions. The timing matters, because missing the deadline can cost you the exemption.

When should I get advice?

Before the structure is settled, which usually means well before a buyer appears. The tests look at ownership history and how the asset has been used. Those facts are largely fixed by the time a contract is drafted. Advice at the offer stage is still useful, but the options are fewer.

The concessions are generous, and they are not automatic

Tell us how the business is owned and what a sale might look like. We will tell you which concessions are in reach, and what would have to happen first.

The tax on your sale was decided years before you decided to sell

You have heard that small businesses can pay little or no capital gains tax on a sale. You would like to know whether that applies to you. Nobody can tell you without looking at how the business is owned, who holds the assets and how they have been used.

The uncomfortable part is the timing. By the time a contract is on the table, most of the facts the tests depend on are already fixed.

We will assess your eligibility against the basic conditions for the concessions.
We will advise on which concessions apply and in what combination.
We will advise on the superannuation contribution required for the retirement exemption.
We will structure the transaction so the concessions remain available.
We will work with your accountant so the legal structure and the return agree.

You are selling and you want to know what the tax will be

You are thinking about selling, or an offer has already arrived. The number sounds good until somebody mentions capital gains tax, and then it sounds less good. Your accountant has said the small business concessions might help, subject to the tests. The business is owned through a company, or a trust, or both. The assets sit in one entity and the trading happens in another, and nobody set it up with an eventual sale in mind.

What's included in your small business CGT concession advice

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Eligibility analysis against the turnover and net asset tests.
Active asset and significant individual assessment.
Advice on all four concessions and how they combine.
Retirement exemption and superannuation contribution advice.
Transaction structuring to preserve eligibility.
Coordination with your accountant on reporting.

What it costs to find out after the contract is signed

The concessions are lost in ordinary ways, not exotic ones. A business restructured for good commercial reasons a year before the sale can break the ownership history the tests depend on. An asset held personally and licensed to the trading company may not qualify as active. A trust that did not make the right distributions in earlier years can fail the significant individual test, and that cannot be fixed retrospectively.

Then there is the structure of the sale itself. An asset sale and a share sale produce different eligibility. Choosing one for simplicity can forfeit a concession worth more than the entire legal cost of the deal. Where the retirement exemption is used, missing the superannuation contribution deadline is enough to lose it. By the time the return is prepared, none of this can be undone.

How we get the concessions working for you

We map the structure first. Which entity owns what, who the significant individuals are, how the asset has been used, and how long that has been true. That tells us which of the basic conditions you already meet and which ones need attention.

Then we model the combinations. The concessions interact, and applying them in a different order can change the tax by a material amount. Where the retirement exemption is in play we deal with the superannuation contribution and its deadline. Where a rollover suits your plans better than an exemption, we say so. We then structure the transaction itself to support the position, because the sale documents have to match the tax analysis rather than contradict it. We work alongside your accountant throughout, so the legal structure and the return tell the same story.

How the concessions get claimed

Eligibility confirmed while the facts can still be changed.

Map the structure

We work through the entities, ownership history and asset use that the basic conditions depend on.

Model the outcome

We test which concessions apply, in which combination, and what each one is worth to you.

Build it in

We structure the sale and its documents so the position claimed in the return is supported.

Advice from a Chartered Tax Advisor of 25 years' standing

There is something particularly galling about a tax bill at the end of a successful sale. Concessions exist that were designed for exactly your situation. The frustration is usually not about the amount. It is about discovering that a decision made years ago, for reasons that had nothing to do with tax, has closed the door.

We have a Chartered Tax Advisor with the Tax Institute of Australia, who has held that qualification for 25 years. We have advised on the small business concessions across companies, unit trusts, discretionary trusts and partnerships. We will give you a straight answer on eligibility, including when the answer is no. Knowing that early is worth more than an optimistic view you cannot rely on.

Our great lawyer guarantee

Six principles we hold to, whatever you bring us and however long it takes.

Take the time

We listen carefully to understand what you want to achieve, then step you through the advice and the documents.

Share our knowledge

We pass on as much as we can, so you can make your own informed decisions.

Stick to our knitting

We only do what we are good at, so you never pay for our learning.

Work as one team

Someone is always available to answer your question or point you the right way.

Fair pricing

A fixed or capped quote for advice and documents, so you do not carry the price risk.

It is your show

We are in it for a front row seat to witness your success, not for our egos.

Find out what the sale will really cost you

Tell us how the business is owned and what a sale would look like. We will tell you which concessions you qualify for today and which are still within reach. Then we will tell you what would need to change to get there.

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