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CGT small business concessions and contributions to super

Steps in navigating small business CGT concessions

Section: 8.4

The CGT small business concessions are complex, but there are some key pieces of information that will simplify navigation of the rules. Answers to the following questions will assist in determining eligibility:

  • What is the nature of the asset(s) being sold? For example, shares in a company, units in a trust, assets such as plant and equipment or business premises. Note there are additional rules to follow when the asset being sold is a share in a company or an interest in a trust.
  • Was the asset used in the course of carrying on a business? That is, was it an active asset? Who carried on that business?
  • Who is the immediate owner of the asset being sold? For example, an individual, a company or a trust. It is the owner who will be claiming the CGT exemption on the sale of the asset and who has to pass many of the eligibility tests.
  • What is the ownership structure between the entity that owns the asset and the individual who ultimately receives an amount as a result of the sale? For example, are there a chain of trusts and companies involved? This question is important for determining who may receive CGT exempt proceeds. When trusts and companies are involved, there is additional information needed for the eligibility tests.
  • If trusts are involved:
    • What type of trust is it? Discretionary or fixed
    • Who are the beneficiaries of the trust(s)?
    • What are their entitlements to distributions of income or capital?
    • Who are the controller(s) of the trust(s)?
  • If companies are involved:
  • Who are the shareholders and what are their ownership percentages?
  • What are their entitlements to distributions of income or capital?
  • Are there any connected entities or affiliates of the taxpayer that need to be considered in meeting the basic conditions below? This is required to determine the assets for the maximum net asset value test and is also used to determine whether the asset is being actively used.

Last modified: Wednesday, July 24, 2019