Important: CGT is genuinely technical and eligibility turns on detail. This is an overview to help you ask the right questions — not a substitute for advice from a registered tax agent.
When you sell a business, the profit is generally a capital gain, so capital gains tax applies. The good news for Australian small business owners is a powerful set of concessions that can cut that tax substantially. This sits within the wider selling process and your succession plan.
First, the basic eligibility tests
To access the concessions you generally need to pass threshold tests — broadly, either a turnover test or a maximum net asset value test — and the asset must be an “active asset” used in the business. Confirm eligibility with your accountant before relying on any of the below.
1. The 15-year exemption
The most generous: if you’ve continuously owned the asset for at least 15 years and are aged 55 or over and retiring, the entire capital gain can be disregarded.
2. The 50% active asset reduction
This reduces the capital gain on an active asset by 50% — and it can stack on top of the standard general 50% CGT discount, potentially shrinking the assessable gain to a quarter of the original.
3. The retirement exemption
Lets you disregard a capital gain up to a lifetime limit. If you’re under 55, the exempt amount generally must be paid into superannuation; at 55 or over, it can be taken in cash.
4. The rollover
If you reinvest the proceeds into a replacement active asset within a set period, the small business rollover lets you defer the gain. Most useful for owners exiting one business to buy or build another.
Why structure and timing matter so much
The concessions interact, and how your business is owned affects which apply. Getting the structure right can take years, which is why tax advice belongs at the start of your exit planning. The ATO’s small business CGT concessions guidance sets out the rules in full.
This guide is general information only and does not take account of your personal circumstances. It is not financial, tax or legal advice. Speak to a qualified adviser before acting.