As a small business owner, selling your business or business assets can trigger a Capital Gains Tax (CGT) liability. However, there are several CGT concessions available to help reduce or even eliminate this tax, ensuring you maximise your return on the sale. Understanding how these concessions work is essential for getting the best tax outcome.
Understanding and accessing these concessions can be complicated, but the benefits are worthwhile.
Want to Reduce or Eliminate CGT on Your Business Sale?
What Are CGT Small Business Concessions?
CGT concessions allow eligible small businesses to reduce, ignore, or delay capital gains from selling business assets. There are four main concessions available:
- 15-Year Exemption
- If you’ve owned the business asset for at least 15 years and you’re 55 or older and retiring, you may be able to disregard the entire capital gain.
- 50% Active Asset Reduction
- You can cut your capital gain on an active business asset by 50%, in addition to the general 50% CGT discount for individuals.
- Retirement Exemption
- You can ignore up to $500,000 of capital gains over your lifetime. If you’re under 55, the amount must go into a complying super fund.
- Rollover Concession
- You can delay your capital gain for up to 2 years if you plan to buy a replacement asset or invest in improving an existing one.
Who Is Eligible for CGT Concessions?
To qualify for these concessions, your business must meet certain conditions:
- Be a small business entity with an aggregated turnover of less than $2 million, or
- Pass the maximum net asset value test (assets must not exceed $6 million).
Additionally, the asset must be an active asset used in the course of business, and you must meet other ownership and timing conditions.
Ready to Maximise Your CGT Concessions?
How to Maximise Your CGT Concessions
Successfully applying for CGT concessions requires careful planning and understanding of the eligibility criteria. You may even be able to combine multiple concessions to further reduce your tax liability, but this requires strategic tax advice.
Why You Need Expert Advice
Each concession has strict eligibility rules. Applying them incorrectly could lead to tax penalties or missed benefits. You might even be able to combine concessions for greater savings, but this requires careful planning.
Ready to Maximise Your CGT Concessions?
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