Small business 15-year exemption from Capital Gains Tax

A small business can disregard a capital gain rising from a CGT event in relation to a CGT asset that it has owned for periods totaling 15 years or more.

This is limited to $500,000, but you can apply discount rules before this. As well, your net assets must be less than $6 million excluding personal use assets.

Provided that this is a small business, several rules apply:

• If the entity is an individual, the individual is over the age of 55 and permanently retires or is incapacitated
• If the entity is a trust or company, the significant Individual permanently retires or is incapacitated
• The asset was an active asset at the time of the disposal
• The active asset was active for at least half the period of ownership or 7.5 years.

Where the 15-year exemption applies, none of the other small business concessions can apply.

There has been a push in Australia to increase Capital Gain Taxes, but it’s misguided as our closest neighbour doesn’t have one, New Zealand.

This concession is often overlooked and its always wise to see your local TaxAssist Accountant for more information.

Date published 11 Oct 2016

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.