Normally, when you sell a business or an asset (like property or goodwill), you pay capital gains tax (CGT) on the profit. The Small Business CGT Concessions are a set of tax breaks that can help business owners reduce or eliminate this tax—as long as they meet the criteria.
There are four key concessions, and if you play your cards right, you might be able to use more than one to get the best outcome.
Before we get into the tax savings, you need to tick a few boxes to be eligible:
✅ Your business (or asset) must be ‘small’
The business must have an aggregated turnover of less than $2 million OR net business assets under $6 million. (This includes assets held by associates and connected entities, so it’s not just what’s on your books.)
✅ The asset must be ‘active’ – The business asset you’re selling must have been used in the business for at least half the ownership period or 7.5 years if owned for more than 15 years.
✅ Shares & Trust Interests? Extra Conditions Apply – If you’re selling shares in a company or an interest in a trust, there are additional tests.
If you pass these tests, congratulations—you’re in the running for some serious tax savings. Now, let’s look at what’s on the table.
There are four main CGT concessions, in addition to the general CGT discount available to individuals, and depending on your situation, you can combine them to maximise your tax benefit.
1. The 15-Year Exemption (The Holy Grail)
If you’re over 55, retiring, and have owned the business for at least 15 years, you pay ZERO capital gains tax on the sale. That’s right—no tax at all. This is the most generous concession, but obviously, not everyone qualifies.
2. The 50% Active Asset Reduction
Even if you don’t qualify for the 15-year exemption, you might still get a 50% reduction on the capital gain. That means if you make a $500,000 profit, only $250,000 is taxable.
3. The Retirement Exemption
This one lets you eliminate up to $500,000 of capital gains tax—but there’s a catch. If you’re under 55, the money must go into a super fund (so no buying a boat just yet). If you’re over 55, you can take it tax-free.
4. The Rollover Concession
If you’re selling one business to buy another, you might be able to defer the capital gain for up to two years, or longer if you reinvest in another active business asset. This gives you some breathing room to plan your next move.
Getting the most out of these concessions isn’t just about knowing they exist—it’s about structuring your business sale the right way. Here are a few things to consider:
🔹 Timing is everything – Holding onto your business for an extra year could mean qualifying for the 15-year exemption or hitting the retirement age to access tax-free funds.
🔹 Mix and match – You can combine multiple concessions to reduce your tax bill even further. For example, you might use the 50% active asset reduction AND the retirement exemption AND the general 50% CGT discount to eliminate tax altogether.
🔹 Super contributions – If you’re under 55, putting the sale proceeds into super can reduce your tax now and boost your retirement savings.
🔹 Check your structure – If you’re selling shares in a company or units in a trust, different rules apply, so get advice on whether restructuring beforehand makes sense.
Even though these concessions are generous, plenty of business owners miss out because of simple mistakes. Here are the most common ones:
❌ Failing the ‘active asset’ test – If you’ve been holding onto business property but not using it in the business, you might not qualify.
❌ Underestimating the $6 million CGT asset test – The ATO includes associated persons and connected entities, so your personal investment property/share portfolio or a business partner’s assets could push you over the threshold.
❌ Selling in the wrong structure – If your business is owned by a trust, company, or partnership, getting access to the concessions can be trickier than if you’re a sole trader.
❌ Not planning ahead – These rules aren’t designed for last-minute tax fixes. You need to plan at least a few years in advance to maximise the benefits.
The Small Business CGT Concessions can save you hundreds of thousands (or even millions) in tax—but only if you structure your sale properly and meet the ATO’s strict conditions.
If you’re thinking about selling your business, don’t leave it until the last minute to get advice. A little planning can mean the difference between a huge tax bill and walking away with more money in your pocket.
Want to make sure you’re getting the best possible outcome when selling your business? Let’s chat. We’ll help you navigate the CGT maze, structure your sale strategically, and keep more of your hard-earned cash.