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Maximising CGT concessions

Small businesses considering selling assets such as property or business goodwill should revisit the potential CGT concessions available to minimise their tax bill.

There are four CGT concessions that small businesses can use subject to meeting specific eligibility requirements. Businesses can apply for as many concessions as they are entitled to until the capital gain is reduced to nil.

The four concessions include:

15-year asset exemption

Owners will not incur CGT when they sell an asset they have owned for 15 years and are aged 55 years or over and are retiring or if they are permanently incapacitated.

50 per cent active asset reduction

Those who own an active business asset will only pay tax on 50 per cent of the capital gain when they dispose of the asset.

Retirement exemption

A capital gain from the sale of a business asset will be exempt up to a lifetime limit of $500,000. For those under 55 years, capital gains must be paid into a complying superannuation fund or a retirement savings account.

Small business rollover

You can defer your capital gain until a later year if you dispose of an active business asset and buy a replacement asset or improve an existing one. The replacement asset can be acquired one year before or up to two years after the last CGT event in the income year for which you choose the rollover.

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