Small Business Retirement Concessions and Exemptions

Are you thinking of selling your business? The value of your business (goodwill and equipment) is considered to be an “active asset” and could therefore be subject to concessional tax treatment.

In order to be eligible a number of criteria must be met. Each situation is going to be slightly different, and how the concessions are applied can depend on factors such as your business structure and whether or not the owners are related parties. It should be noted that the concessions apply only to “small” businesses which, in general terms, are defined as:

  •    Turnover less than $2 million for the year; or
  •    “Active” net assets of less than $6 million

In general, there are four main concessions that are available:

1. The 15 year exemption

If you are aged 55 years or over and are retiring, or if you are permanently incapacitated, there is no assessable capital gain if your business has owned an asset for 15 years and makes a gain when you sell the asset.

2. The 50% active asset reduction

The capital gain on a business (active) asset can be reduced by 50%.

3. The retirement exemption

A lifetime limit of $500,000 of capital gains from the sale of a business asset can be exempt. If you are under 55 years of age, then the exempt amount must be paid into your super account to get the exemption.

4. The rollover exemption
This allows you to defer your capital gain until a later year if you sell a small business asset.

Whilst there are some rules about how you apply the concessions, you can apply those you are entitled to until the capital gain is reduced to nil.

If you are thinking of selling your business it is prudent to get advice early as to the best approach for utilising the small business concessions.



by Scott Sharp

Scott is a Senior Accountant at Insight Accounting advice. He has a Bachelor of Commerce and is a registered tax agent. Scott’s experience covers all facets of accounting but he specialises in small businesses and SMSFs.


The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information.