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CGT small business concessions and contributions to super

Contribution rules for the CGT cap

Section: 8.11

In addition to qualifying for the small business CGT concessions, there are further rules to be met to allow those CGT exempt amounts to be contributed to super and count toward the CGT cap rather than being counted as non-concessional or concessional contributions.

Important!
In addition to the rules outlined, to have a contribution count toward the CGT cap amount a client must complete a request on the approved form and give it to the super provider at or before the time the contribution is made.

The ATO has published an approved form NAT 71161. To obtain a copy of ATO form NAT 71161 go to www.ato.gov.au and enter 71161 in the blank search box in the top right hand corner of the screen.

It is not compulsory to use the ATO version of the form. These notifications can be made to the super fund in various ways and funds may create their own form for their members to use. The ATO form sets out the minimum data requirements.

The small business 15-year exemption - contribution rules 

If an entity can disregard a capital gain (or would be able to if a capital gain arose) from a CGT event under the 15 year small business exemption, the client may choose to contribute all or part of these proceeds to super.

Note: Contributions to super under this rule may include the proceeds from the sale of pre-CGT assets (purchased prior to 20/09/85), or proceeds from a sale where there was no capital gain or a capital loss. 

Direct ownership of CGT asset and the 15-year exemption
Where the entity owned the CGT asset directly, the super contribution must be made by an individual before the later of:

  • The day the entity is required to lodge their tax return for the income year in which the CGT event happened, or
  • 30 days after the day the entity receives the capital proceeds.

Company or trust owns the CGT asset and the 15-year exemption

Where the CGT asset is owned through a company or trust structure, the following requirements must be met:

  • The individual receiving the exempt proceeds from the company or trust must be a CGT concession stakeholder just before the CGT event.
  • The payment must not exceed the individual's CGT concession stakeholder participation percentage.
  • The company or trust must make the payment to the individual within two years after the CGT event.
  • Where the individual wishes to make a contribution under the lifetime CGT cap, the contribution must be made within 30 days of the individual receiving the payment from the company or trust.

The small business retirement exemption - contribution rules

An entity may choose to contribute all or part of a capital gain that has been exempted from CGT under the CGT retirement exemption to super (an individual under the age of 55 must contribute the amount to super to qualify for the small business retirement exemption). The contribution will be limited to the lesser of the exempt amount (which is limited to $500,000) and the person's remaining CGT cap amount.

Direct ownership of CGT asset and the retirement exemption

Where the entity owned the CGT asset directly, the super contribution must be made on or before the later of:

  • The day the entity is required to lodge their tax return for the income year in which the CGT event happened, and
  • 30 days after the day the entity receives the capital proceeds from the CGT event.

Company or trust owns the CGT asset and the retirement exemption

Where the CGT asset is owned through a company or trust structure, the following requirements must be met:

  • The individual receiving the exempt proceeds from the company or trust must be a CGT concession stakeholder just before the CGT event.
  • The entity must make a payment to the individual that satisfies the company or trust conditions under the small business retirement exemption (these conditions are in s152-325 of ITAA 1997 and include the requirement to make a payment within the later of seven days after the company or trust chooses the concession and seven days after the entity receives proceeds from the CGT event).
  • If the individual is under age 55 just before the payment, the company or trust must instead contribute the payment to super on the individual's behalf.
  • Where the individual over 55 wishes to make a contribution under the lifetime CGT cap, the contribution must be made within 30 days of the individual receiving the payment from the company or trust.

Last modified: Tuesday, May 2, 2017