The capital gains tax (CGT) small business concessions in Australia refer to a set of tax benefits and reductions available to eligible small businesses when they sell or dispose of certain assets. These concessions aim to provide financial relief and incentives for small business owners. The key CGT concessions for small businesses include:

  1. 15-year exemption: Small business owners who are aged 55 or older and have owned the business asset for at least 15 years may be eligible for a complete CGT exemption. This means they will not have to pay any capital gains tax on the sale of their business asset.
  2. 50% active asset reduction: Small business owners can claim a 50% reduction on the capital gain made from the sale of an active asset, provided they have owned the asset for at least 12 months. This reduction effectively lowers the amount of capital gains tax payable.
  3. Retirement exemption: Small business owners who are under the age of 55 can contribute up to $500,000 from the sale of their business into their superannuation fund without incurring any capital gains tax. This concession helps small business owners save for retirement.
  4. Rollover relief: Small businesses may be eligible for rollover relief, allowing them to defer the capital gains tax liability when they sell one business asset and use the proceeds to acquire another replacement asset. This helps businesses to reinvest their funds without immediate tax implications.

It’s important to note that these concessions have certain eligibility criteria and conditions that need to be met. The Australian Taxation Office (ATO) provides detailed guidelines and information regarding the small business CGT concessions, and it is advisable for small business owners to consult with tax professionals or the ATO directly to determine their eligibility and how to apply for these concessions.

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