All you want to know about Small Business CGT Concessions

If you are a small business owner, it is very important that you should be familiar with CGT (small business capital gains). The concessions could offer significant financial benefits that depend on your personal situation and how long you have owned your present business. However, this is mainly an accountant’s area of expertise, but a few companies like Mosaic Tax Legal in Sydney can work with your accountant to ensure you access all the applicable concessions and could help you determine the best and effective strategy.

What is a small business CGT concession?

Before getting further into CGT concessions, it is important that you must understand what a capital gain tax is. When you plan to sell any investment asset like a factory or a small business, Australian Tax Office needs that you pay capital gain after selling of that asset. The reason is that any income-producing assets like shares or property have an assessable capital gain when an owner gets profit on the sale of that asset. 

The small business capital gains tax (CGT) is designed and allows to reduce, disregard or even defer some or all of a capital gain from any active asset that is used in small business. These concessions are available if you dispose of an active asset while meeting eligibility requirements.

Benefits of CGT small business concessions

When small businesses must pay less CGT, owners of small businesses taxpayers can:

  • Boost their saving during retirement; and/or
  • Keep more of their hard-earned money.

The 4 types of CGT small business concessions are:

To qualify for ATO CGT small business concessions, you must meet some primary conditions prescribed by the Australian Tax Office.

15-year exemption

It is important that you meet the criteria of 15-year exemption; undoubtedly this is the most generous of 4 small business CGT concessions since the entire capital gain might be exempted from tax. According to the ATO, to qualify for the 15-year exemption you should own the asset continuously for 15 years that must end just before the asset’s sale.

50% active asset reduction

Suppose you decide to apply for 50% active asset reduction CGT concession. In such a case, you simply require to meet the basic conditions. The 50% active asset reduction is in addition to 50% CGT disc. which you are entitled to when you have owned the assets for at least 12 months before you sell it off.

Retirement exemption

In small business CGT concessions, you need not pay CGT on your assets up to a lifetime limit of $500,000. This retirement exemption can be used in addition to or in place of the 50% active asset reduction.


The small business rollover can allow you to defer all or a part of a capital gain on selling of a business asset for a minimum period of 2 years. You need not pay tax on the capital gain until a change in any of your circumstances causes to sell your replacements asset.

If you looking for the most efficient ATO CGT small business concessions in Sydney, Australia, contact Mosaic Tax Legal. It is one of the most recognized boutique tax law firms advising businesses, individuals and investment entities all around Australia and across the globe.

News Reporter