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Small business CGT concessions when you sell

By , founder of SignetryLast reviewed

General information, not financial, tax or legal advice. Check your own position with your accountant before you rely on any of it.

If you sell an active business asset, the small business CGT concessions can cut or defer the capital gains tax on the sale, sometimes to zero. You must be an eligible entity (the turnover test and the net asset value test are two of the four ways), and the asset must pass the active asset test1. There are four concessions - the 15-year exemption, the 50% active asset reduction, the retirement exemption and the rollover - and you can use more than one on the same gain1. A sale of the whole business can also be GST-free as a going concern2. The 50% reduction is automatic; for the other three, you choose before you lodge your tax return for the year of the sale1.

Do you qualify: the basic conditions

To be eligible for any small business CGT concession, you need to meet one of the basic conditions on the ATO's list for being an eligible entity, plus the active asset test; if the asset is a share in a company or an interest in a trust, extra conditions apply to who the CGT concession stakeholders are1.

  • Turnover test: your aggregated turnover must be less than $2 million1.
  • Net asset value test: if you don't pass the turnover test, the net value of the CGT assets owned by you, entities connected with you and your affiliates must not exceed $6 million just before the sale, and this limit isn't indexed3.
  • Active asset test: the asset must have been active for at least 7.5 years of the test period if you've owned it more than 15 years, or half the test period otherwise; the period need not be continuous, and an asset used mainly to derive rent usually isn't active4.

The four concessions

The 15-year exemption

If you've owned the asset continuously for the 15 years before the sale, and you (or the significant individual, for a company or trust) are 55 or older and the sale is connected to your retirement, or permanently incapacitated, the whole gain is disregarded without offsetting capital losses first or applying any other concession5. A company or trust needs a significant individual for at least 15 years of its ownership of the asset5.

The 50% active asset reduction

This applies automatically unless you choose otherwise6. After capital losses and the CGT discount (where it applies), the reduction halves what remains6. The retirement exemption or rollover can then reduce the rest1. Companies cannot use the CGT discount7.

The retirement exemption

Gains from an active asset can be disregarded up to a lifetime limit of $500,000 per individual, or per CGT concession stakeholder for a company or trust, without ending your employment or business activities8. You must be 55 or older just before choosing it to skip the super contribution; for a company or trust, the stakeholder must be 55 or older just before the fund payment8. Under 55, the exempt amount must go into super instead8.

The rollover

This defers the gain rather than exempting it, useful when buying into another business asset. The replacement asset period runs from one year before the last CGT event in the rollover's income year to the later of two years after, or six months after a look-through earnout benefit falls due9. If by the end of that period you haven't acquired a replacement asset or made capital improvements, or the replacement or improved asset isn't an active asset, you make a capital gain equal to the gain you rolled over; if you spent less than the amount rolled over, you make a capital gain equal to the difference9.

The CGT cap and your super

Retirement exemption or 15-year exemption proceeds put into super normally count as a non-concessional contribution5. Electing to count them against the CGT cap instead excludes these amounts from your non-concessional contributions cap, up to the CGT cap amount, during your lifetime10, provided you notify your fund with the CGT cap election form no later than when you contribute58. The cap is indexed to average weekly ordinary time earnings in $5,000 increments, generally published each February, and is $1,935,000 for 2026-2710. Check the current figure before relying on it.

GST and a going concern sale

Selling the whole business, rather than a bundle of assets, can be GST-free if: you and the buyer agree in writing, before the sale, that it's a going concern; the buyer is registered or required to be registered for GST; everything necessary for the business to continue is included; you carry on the business until settlement; and payment is made2. This is separate from the CGT concessions above - a GST-free going concern sale can still trigger a capital gain the concessions apply to.

Who to ask

The tests above decide whether you qualify, not which concessions to choose, in what order, or how the entity you sell through changes the outcome. That's a conversation with your accountant, and for a trust, a company structure or an earnout, your lawyer too. See business valuation for how the price is worked out, and business brokers if you sell through one. Signetry lists businesses for sale; it isn't a party to your sale and doesn't advise on tax.

Sources

  1. CGT concessions eligibility overview, Australian Taxation Office, last updated 28 January 2026, accessed 24 Sep 2026. Basic eligibility conditions, the four ways to be an eligible entity (including the turnover test and the net asset value test), the $2 million turnover test, the four concessions, that the 50% active asset reduction applies automatically, and the choice deadline.
  2. GST-free sales, Australian Taxation Office, last updated 14 September 2026, accessed 24 Sep 2026. The five conditions for a GST-free sale of a business as a going concern.
  3. Maximum net asset value test, Australian Taxation Office, last updated 6 May 2024, accessed 24 Sep 2026. The $6 million net asset value test, that it counts connected entities and affiliates, and that it isn't indexed.
  4. Active asset test, Australian Taxation Office, last updated 2 February 2026, accessed 24 Sep 2026. The 7.5 year and half-period ownership tests, that the period need not be continuous, and that an asset used mainly to derive rent usually cannot be active.
  5. Small business 15-year exemption, Australian Taxation Office, last updated 6 June 2023, accessed 24 Sep 2026. Ownership period and retirement or incapacity conditions, the significant individual test, and the non-concessional contribution treatment.
  6. Small business 50% active asset reduction, Australian Taxation Office, last updated 6 June 2023, accessed 24 Sep 2026. How the reduction applies automatically, that it is applied after capital losses and the CGT discount if applicable, and where it sits in the order of concessions.
  7. CGT discount, Australian Taxation Office, last updated 29 June 2026, accessed 24 Sep 2026. Confirms companies can't use the CGT discount.
  8. Small business retirement exemption, Australian Taxation Office, last updated 6 June 2023, accessed 24 Sep 2026. The $500,000 lifetime limit, the age tests for individuals and CGT concession stakeholders, and the CGT cap election form.
  9. Small business roll-over, Australian Taxation Office, last updated 4 September 2025, accessed 24 Sep 2026. The replacement asset period and when the deferred gain is triggered, including when the roll-over amount exceeds the cost of the replacement or capital-improved asset.
  10. Contributions caps, Australian Taxation Office, last updated 11 September 2026, accessed 24 Sep 2026. The CGT cap amount of $1,935,000 for 2026-27, its indexation method, and the lifetime nature of the cap.

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