The Government will amend the small business CGT concessions to ensure that the concessions can only be accessed in relation to assets used in a small business or ownership interests in a small business.
Division 152 of the Income Tax Assessment Act 1997 provides four concessions to eliminate, reduce and/or provide a rollover for a capital gain made on a CGT asset used in a small business:
- the “15-year exemption”;
- the “50% reduction”;
- the “retirement exemption”; and
- the “roll-over” concession.
The concessions are designed to assist owners of small businesses by providing relief from CGT on assets related to their business which helps them to re-invest and grow, as well as contribute to their retirement savings through the sale of the business.
However, some taxpayers can access these concessions for assets unrelated to their small business, eg through arranging their affairs so that their ownership interests in larger businesses do not count towards the tests for determining eligibility for the concessions.
The amendments to avoid this are proposed to start on 1 July 2017.The small business CGT concessions will continue to be available to small business taxpayers with aggregated turnover of less than $2 million or business assets less than $6 million.