Sell your business, and keep more of what it is worth

To reach any of the four concessions you first pass a common gateway: either your business turns over less than $2 million a year, or the net value of your assets is under $6 million. From 1 July 2027 the fifty per cent active asset reduction uses a higher $10 million turnover test, while the other three concessions keep the $2 million test.

Get the groundwork right before you sign, and far more of the proceeds stay with you and your family.

What the small business CGT concessions actually do

Each concession works differently, and they stack in a set order, one after another, until the gain is reduced to nil or the remainder is deferred.

1. The 15-year exemption

If you have owned the asset continuously for at least fifteen years and, at the time of sale, you are 55 or over and retiring, or permanently incapacitated, the entire capital gain can be disregarded. It is the most valuable of the four, because it removes the gain rather than trimming it.

2. The 50 per cent active asset reduction

This halves the remaining gain. For gains arising before 1 July 2027, it sits on top of the ordinary fifty per cent general discount, so a gain can be reduced by half, and then by half again, before any further concession is applied. For gains arising from 1 July 2027, the general discount is replaced by indexation plus a 30 per cent minimum tax. How that interacts with the active asset reduction had not been legislated when this guide was last reviewed.

3. The retirement exemption

Up to a lifetime cap of $500,000 of the gain can be set aside where the money goes towards your retirement. If you are under 55, the amount is paid into superannuation. From 55, you can take it in cash.

4. The rollover

The gain can be deferred by rolling it into a replacement business asset bought within a set window. It postpones the tax rather than cancelling it, and the deferred gain can resurface later if the replacement is sold or stops being used in the business.

Who qualifies

Two gateways sit in front of all four concessions, and you need to pass both.

The size test

You meet this in one of two ways: an aggregated annual turnover under $2 million, or net assets of no more than $6 million. Aggregated turnover counts your connected entities and affiliates, not only the entity making the sale, and that is where owners are most often caught out. From 1 July 2027 the fifty per cent active asset reduction is available up to a $10 million turnover.

The active asset test

The asset you are selling has to have been used in the business rather than held as a passive investment. Premises you trade from usually qualify. A property leased to a third party for rent usually does not. Because this test decides so many property sales, it has its own guide.

Where the small business CGT concessions are most often lost

In our experience, three things cost owners the most. The first is aggregated turnover, where a connected entity tips a business over the line. The second is the active asset test on property that was once used in the business but had drifted into a passive investment by the time it sold. The third is timing on the retirement exemption for people under 55, where the amount has to actually reach superannuation, paid the right way and on time, to be exempt at all.

Frequently asked questions