Precision needed to meet CGT on small business concession rules

For small businesses selling their business assets, generous CGT concessions may reduce their capital gain and also boost their super.
But strict rules apply.

Capital gains tax (CGT) concessions can create powerful tax and superannuation planning opportunities for small businesses. However, since legislation was introduced last year to include extra tests and conditions to access the concessions, you need to use surgical precision to ensure your clients are eligible.

The concessions can allow small business owners to reduce, or in some cases eliminate, the capital gain when they sell their business assets, and also offer them the chance to make significant extra super contributions – even up to $1,515,000. Considering the usually restrictive annual contributions caps, this could be an attractive benefit for many owners planning for retirement.

Beware the conditions

There are several concessions available to small businesses, such as simplified depreciation rules, simplified record keeping obligations, concessions relating to income tax, GST, FBT and excise and CGT concessions, and all have their own eligibility rules.

However there are two basic conditions that small businesses must now meet to be eligible for the available concessions:

  • Size: They need to show that they have an annual aggregated turnover of $2 million or less last income year; or satisfy a $6 million net value asset test.
  • “Active asset”: The capital gain must arise from the sale (or other CGT event) of an “active asset”.

Knowledge delivered differently

Navigating your way through these rules and conditions can be a minefield. Ensuring you have the knowledge to enable your clients to meet all the technical and timing requirements can be demanding.

Fortunately, Thomson Reuters has designed an interactive learning program to guide practitioners through key steps on a range of topics, including CGT on small business concessions.

Checkpoint Tax e-Learning is a knowledge development program with distinct modules covering a broad range of tax topics, accessible online 24/7.

The program allows you to focus on identifying key issues quickly and access tools to use in client situations on an ongoing basis.

A learning program with a dual purpose

In addition to building and reinforcing your knowledge in a specific area, you can also claim one CPD hour for each of the 15 interactive modules to meet three different levels of experience, from entry to partner level.

So, whether you’re just starting out, brushing up on your knowledge and skills, or want to go straight to the CGT on small business concessions module, it’s your choice!

Find out how Thomson Reuters can help you meet your CPD requirements at your convenience with practical Tax e-Learning.

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