What You Need to Know About Small Business CGT Concessions

The four concessions you might qualify for

The Australian Taxation Office (ATO) offers four different small business CGT concessions. You might be able to use more than one:

1. 15‑year exemption – If you've owned the asset for 15 years and you're over 55 and retiring (or permanently unable to work), you might be able to ignore the gain completely.
2. 50% active asset reduction – Cuts the taxable gain in half (on top of any standard CGT discount).
3. Retirement exemption – Lets you disregard up to $500,000 of gains over your lifetime. If you're under 55, the amount has to go into your super.
4. Rollover relief allows you to delay paying CGT if you buy another business asset or improve an existing one within certain time limits.

How to work out if you're eligible

To use these concessions, your business must meet basic rules:

• Small business test – Your annual turnover must be under $2 million, or your net business assets must be under $6 million.
• Active asset test – The asset must have been used in your business for at least half the time you've owned it (or 7.5 years if you've owned it for more than 15 years).
• Ownership rules – Extra conditions apply if the asset is a share or interest in a trust.

If you tick those boxes, you can start looking at which concessions work best for you.

A simple example

Let's say you sell an active business asset and make a $20,000 profit.

1. You have a $4,000 capital loss from another asset: $20,000 – $4,000 = $16,000.
2. You qualify for the 50% CGT discount: $16,000 ÷ 2 = $8,000.
3. You also qualify for the 50% active asset reduction: $8,000 ÷ 2 = $4,000.
4. You could then use the retirement exemption or rollover to reduce the $4,000 to zero.

That's how powerful these concessions can be when combined.

Common mistakes you should avoid

The ATO has warned about common errors people make when claiming :

• Misunderstanding the rules – thinking your turnover is under $2 million when it's not, or forgetting to count connected businesses.
• Wrong ownership dates – claiming when you haven't owned the asset long enough.
• Mixing up discounts – applying the concessions in the wrong order.
• Not using the correct concession codes – leaving out key details on your tax return.

How to report your small business CGT concessions

The way you report these concessions depends on how your business is set up.

• Suppose you're a sole trader or in a partnership. In that case, you'll need to fill in the supplementary section of your individual tax return. This is where you record details about your capital gains and note which CGT concessions you've applied.
• If you operate through a company or a trust, you can't just list it in your tax return. You'll need to complete a CGT schedule and attach it to your business tax return. This schedule gives the ATO a clear breakdown of your capital gains calculation and which concessions you've claimed.

If you're unsure which forms you need or where the numbers go, the ATO's CGT reporting guide explains it step-by-step. Or better yet, we can prepare it for you so it's correct the first time, saving you stress and avoiding ATO follow-up questions.