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CGT small business concessions and contributions to super

Small business 50% (active asset) reduction

Section: 8.7

The amount of a capital gain may be reduced by 50%, if the basic conditions in section 8.5 are satisfied for the gain. There are no additional rules for the 50% (active asset) reduction.

If the capital gain has already been reduced by a discount percentage (where the asset is held for at least 12 months), the 50% active asset reduction applies to the reduced gain.

If a taxpayer qualifies for only the 50% active asset reduction, these proceeds cannot be contributed to super under the lifetime CGT cap, but may be contributed to superannuation and count towards an individual's concessional or non-concessional caps.

Taxpayers have the option of not applying the active asset reduction when selling CGT assets. By not applying this 50% reduction, the amount of capital gain that can be exempt under the $500,000 retirement exemption (and contributed to super under the lifetime CGT cap) can, in many cases, be maximized.

Last modified: Wednesday, July 24, 2019