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LexisNexis Practical Guidance®
Straightforward guidance across a range of topics
- Purchase and sale of business
- Tax factors
Small business relief
There are very generous concessions available on the sale of small businesses, which greatly reduce or eliminate Capital Gains Tax payable. These are covered by ss 152-1 to 152-430 of the Income Tax Assessment Act 1997 (Cth) (ITAA 1997). To qualify for the concessions, a series of tests must be passed. Each is surrounded by complex rules.
The concessions are:
- • 15 year exemption. A business operating for more than 15 years can be sold free of CGT.
- • 50% reduction. CGT is paid on only 50% of the capital gain. This is in addition to the 50% discount on CGT for individuals selling assets they have owned for more than 12 months.
- • Retirement Exemption. There is an exemption for capital gains of up to $500,000 per person, if either the exempt amount is rolled into superannuation, or the person is already over 55 years of age.
- • Small Business Roll-Over. If, within 1 year before or 2 years after the sale of a business, the sale proceeds are used to buy another business, no CGT is payable on the sale of the first business.
See Small business relief.
