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Most people agree there is very little government assistance provided to small businesses. There is however one significant concession the government provides, which relates to selling your small business.

The Capital Gains Tax (CGT) concessions provide options on how to reduce the Capital Gains Tax – sometimes to ‘nil’ – when or if you finally decide to sell.

There are four CGT concessions that you may be eligible for. They are as follows:

  • CGT 15-year asset exemption: if your business has owned an asset for at least 15 years and you are retiring or aged over 55, you wont have to pay CGT when selling the asset.
  • CGT 50% Active Asset Reduction: When you sell an asset that has actively helped to conduct your business you’ll only pay 50% of the capital gain.
  • CGT Retirement Exemption: There is CGT exemption on the sale of a business asset, up to a lifetime limit of $500,000. However if you are under 55, the money from the sale must be placed into a super or retirement savings account.
  • CGT Rollover: If you replace or improve an existing business asset and have sold the previous asset you can defer any capital gain up to a year.

You can find more information about CGT concessions here.

If the business is owned by a partnership, trust or sole trader the 50% CGT discount may also apply.

Generally you will be able access these concessions if the turnover of your business satisfies any of the following:

  • was less than $2m in the previous financial year
  • is estimated to be less than $2m for the current financial year and was less than $2m for the previous 2 year, or
  • is actually less than $2m at the end of the current year.

Bear in mind the concession applies to Capital Gains Tax only, so Stamp Duty may still apply.

This Tax Tips Tuesday is brought to you with love by Nudge Accounting. You can read other Tax Tips here.