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The gateways: pass one, plus the active asset test
| Gateway | Test |
|---|---|
| CGT small business entity | Aggregated turnover under $2 million, which is far tighter than the $10 million instant asset write-off test |
| Maximum net asset value | Net CGT assets of you and your connected entities of $6 million or less just before the sale, excluding the main residence and super |
| Active asset test (always) | The asset was used in the business for the required proportion of ownership. Goodwill and business premises usually pass; rental and passive investments fail by design |
Extra plumbing applies to selling shares or trust interests rather than business assets, through the significant individual and 20% stake rules. That is where do-it-yourself eligibility calls go wrong most often.
The four concessions
The four small business CGT concessions
The 15-year exemption, the jackpot
Owned 15 years or more, you are 55 or older and the sale connects to retirement or permanent incapacity: the entire gain is disregarded, no other concession needed, and proceeds can go to super under a special lifetime cap.
The 50% active asset reduction
Stacks on top of the general discount: gain, then 50% general discount for individuals and trusts, then 50% again, leaving tax on a quarter of the gain.
The retirement exemption
Up to $500,000 of gain per individual over a lifetime is exempt. You do not have to actually retire, but under 55 the amount must be contributed to super.
The rollover
Defer the gain by acquiring a replacement business asset within a two-year window. A timing tool, often used as a bridge to another concession later.
The stack, in numbers
A sole trader business is sold with an $800,000 goodwill gain. The gateways are passed, the asset was held three years and the owner is 48.
| Step | Gain remaining |
|---|---|
| General 50% discount | $400,000 |
| 50% active asset reduction | $200,000 |
| Retirement exemption, contributed to super because the owner is under 55 | $0 taxable |
Eight hundred thousand dollars of gain, no CGT, legally and routinely. Now the structural sting: companies get no general discount, so a company selling assets starts the stack a step behind. That is one more entry in the structure decision's exit column, and the reason trusts often win for businesses with a sale in their future. You can model a headline gain with our CGT calculator before applying any concession.
Why this is a years-before-the-sale conversation
The ATO's default view of a business sale is a full gain with no concessions at all, which is exactly what a default assessment will assume if you never lodge.
Frequently asked questions
What are the small business CGT concessions?
Can the concessions reduce my tax to zero?
Do companies get the same result?
Does the retirement exemption require retiring?
When should I start planning for the concessions?
General information only - not personal tax, financial or legal advice. Consider your own circumstances or speak to a registered tax agent. Remission of penalties or interest and payment plans are decisions of the ATO and outcomes can't be guaranteed.