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CGT small business concessions and contributions to super

In specie transfers to an SMSF and the small business CGT concessions

Section: 8.12

The ATO have indicated via a number of private binding rulings that in specie contributions of active assets, such as business real property, may not qualify for the lifetime CGT cap where the super contribution is also the event that qualifies for the small business CGT concessions.

A number of private binding rulings (e.g. 1013054081138 and 1013008906784) have denied an in specie contribution from being counted under the lifetime CGT cap where the property was owned by an individual, and the individual qualified for the 15-year exemption or the retirement exemption.

In the rulings above, the ATO stated that the contribution rules (s 292-100(2)(b) and s 292-100(7)(b)) for individuals eligible for the 15-year exemption or the retirement exemption:

"contemplate the CGT event and the payment to SMSF happening at separate times ... The legislation does not contemplate that the CGT event, choice and contribution of the CGT exempt amount can happen simultaneously. Rather, each of the relevant steps must happen sequentially, therefore, that initial transfer of the property cannot also be the final contribution required under section 292-100. You will not be able to exclude the contribution from being a non-concessional contribution"

Where the contribution does not count against the CGT lifetime cap it will be made as a non-concessional or concessional contribution, depending on whether a valid deduction notice is submitted.

Note: In other circumstances, such as where the CGT event and the in specie contribution are separate events, in specie contributions may qualify for the CGT small business concessions and the lifetime CGT cap. See ATO ID 2010/217.

Clients making in specie contributions to super should seek professional taxation advice regarding the eligibility to have such a contribution count against their lifetime CGT cap.

Last modified: Thursday, November 15, 2018