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CGT small business concessions and contributions to super

Small business 15-year exemption

Section: 8.6

The small business 15-year exemption allows a taxpayer to disregard all of a capital gain from the sale of a CGT asset.

15-year exemption for individuals - additional conditions

The basic conditions must be met before any specific small business CGT concession can be claimed. Refer to section 8.5 for the basic conditions that must be satisfied.

The following additional conditions must be met by individuals to qualify for the small business 15-year exemption:

  • the taxpayer continuously owned the asset for the 15-year period leading up to the CGT event
  • the taxpayer is:
    • aged 55 or over and the CGT event happens in connection with their retirement, or
    • permanently incapacitated, and
  • if the CGT asset that is being sold is a share in a company or an interest in a trust, the company or trust must have had a significant individual for periods totaling at least 15 years during the entire time the taxpayer owned the share or interest, even if it was not the same significant individual during the whole period.

15-year exemption for individuals - contribution rules in order to utilise lifetime CGT cap

If the sale of an asset by an individual qualifies for the 15-year exemption, the individual can contribute all or some of the total proceeds from the sale to superannuation and elect for it to count towards the lifetime CGT cap. The total proceeds from the sale will likely exceed the capital gain from the sale.

Also, if the sale of an asset would otherwise qualify for the small business 15-year exemption, but does not because:

  • the asset was a pre-CGT asset, or
  • there was no capital gain on the disposal of the asset, or
  • the asset was sold within the 15-year timeframe due to permanent incapacity the owner can contribute all or some of the total proceeds from the sale to super and elect for it to count towards the lifetime CGT cap.

To have the amount count towards the CGT lifetime cap the individual must submit a CGT cap election form (ATO form NAT 71161) to the super provider at or before the time of the contribution.

It's also important to note that normal contribution eligibility rules apply to the contribution of eligible small business sale proceeds. That is, the member must be under the age of 65 at the time of the contribution, or under the age of 75 and meet the work test at the time of the contribution.

Timing of contribution

An individual must contribute an amount qualifying for the 15-year exemption on or before the later of the following days:

  • the day the individual's income tax return is required to be lodged for the income year in which the CGT event happened, or
  • 30 days after the day the individual receives the capital proceeds.

15-year exemption for companies and trusts - additional conditions

The basic conditions must be met before any specific small business CGT concession can be claimed. Refer to section 6.5 for the basic conditions that must be satisfied.

The following additional conditions must be met by companies or trusts to qualify for the 15-year exemption:

  • the taxpayer continuously owned the asset for the 15-year period leading up to the CGT event
  • the taxpayer had a significant individual for a total of at least 15 years of the whole period of ownership (even if it was not the same significant individual during the whole period)
  • just prior to the CGT event, an individual who is a CGT concession stakeholder is:
    • aged 55 or over and the CGT event happens in connection with their retirement, or
    • permanently incapacitated, and
  • if the CGT asset is a share in a company or an interest in a trust, that company or trust must have had a significant individual for periods totaling at least 15 years during the entire time the taxpayer owned the share or interest, even if it was not the same significant individual during the whole period.

Payments to stakeholders

A company or trust is not required to make a payment to one or more stakeholders in order to qualify for the 15-year exemption. However, if the sale of an asset by a company or trust qualifies for the 15-year exemption (or would otherwise qualify except for it being a pre-CGT asset), a payment of the exempt amount made within 2 years to a CGT concession stakeholder is exempt from tax, to the extent that the proportion of exempt gain distributed to the stakeholder does not exceed their 'stakeholder participation percentage'.

15-year exemption for companies or trusts - contribution rules in order to utilise lifetime CGT cap

Where a client who is a CGT concession stakeholder receives such a payment within 2 years of the CGT event, they can contribute it to super and elect for it to count towards the lifetime CGT cap.

However, if any part of the payment received exceeds the client's stakeholder participation percentage in the company or trust, the client cannot elect to count the excess towards the lifetime CGT cap (normal contributions caps would apply to the excess).

To have the eligible amount count towards the CGT lifetime cap, the CGT concession stakeholder must submit a CGT cap election form (ATO form NAT 71161) to the super provider at or before the time of the contribution.

It's also important to note that normal contribution eligibility rules apply to the contribution of eligible small business sale proceeds. That is, the member must be under the age of 65 at the time of the contribution, or under the age of 75 and meet the work test at the time of the contribution.

Timing of contribution

The contribution must be made within 30 days of the payment from the company or trust.

Last modified: Wednesday, May 1, 2019