Small Business Exemptions

When a Member sells a small business, the proceeds are taxed concessionally if contributed to an SMSF. However, there are Capital Gains Small Business concessions that apply to provide a measure of Capital Gains Tax (CGT) relief on the sale of the business apart from the general 50% CGT discount from an individual’s perspective. To be eligible for the small business concessions, we explain the rules below.

These small business concessions are generally treated as a non-concessional contribution. To exclude this amount being counted towards the Member’s non-concessional cap, the Member must complete a “Capital gains tax cap election form (NAT 71161)” at the time the contribution is made. Then the contribution will be counted towards the Member’s CGT cap.

Small Business tax concessions

There are four types of CGT Small Business tax concessions available for Members who decides to sell their business:

Small Business 15 year Exemption
50% active asset reduction
Small Business Retirement Exemption
Small Business rollover

CGT Cap

This is simply the limit on the amounts that can be excluded from a Member’s non-concessional cap. This is a lifetime amount and it is indexed annually. Each time you elect to exclude an eligible contribution from the non-concessional contributions cap, your super CGT cap amount is reduced by that amount. A Member should make sure that the contribution made to the Fund as a result of CGT concession does not exceed the CGT cap amount.


Are you eligible?

There are certain basic conditions that needs to be satisfied to be eligible for the CGT concessions. In addition to these basic conditions there are extra conditions contained for each CGT Small Business Concession listed below.

Basic conditions that needs to be satisfied are as follows:

  • A capital gain must arise on disposal of the asset,
  • Either your business turnover is less than $2 million, or the net value of your assets and the assets of entities connected with you is less than $6 million (this excludes personal use assets) and
  • The asset disposed must be an “active asset”.

This page consists of a summary of the CGT Small Business Concessions available for small business owners. More information on the rules that is applicable to these CGT concessions is available on the ATO website.

Age restrictions to consider when contributing:

Age Rules for the contributions to be accepted
Less than 65 Accepted without restrictions
65-74 Accepted providing Member meets work test
75 and over Cannot be accepted

Small Business tax concessions

There are four types of CGT Small Business tax concessions available for Members who decides to sell their business:

Small Business 15 year Exemption
50% active asset reduction
Small Business Retirement Exemption
Small Business rollover

More information on contributions are explained in our contributions page.

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We are Melbourne based with clients throughout Australia. Our SMSF administration service is mostly paperless. This enable us to charge a fair fee, resulting in a good value-proposition for you.

No Advice

Superannuation Warehouse is an accounting firm and do not provide financial advice. All information provided has being prepared without taking into account of the Trustees’ objectives, financial situation or needs. Because of that, Trustees are advised to consider their own circumstances before engaging our services.

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