For many business owners, selling a business is more than a transaction. It represents the culmination of years, often decades, of commitment, sacrifice and enterprise. Yet without careful planning, a significant portion of the wealth you’ve worked so hard to create can be lost to Capital Gains Tax (CGT).
The good news is that Australia’s Small Business CGT Concessions can deliver substantial tax savings and, in some circumstances, eliminate CGT altogether.
The Four Small Business CGT Concessions
Eligible small business owners can access up to 4 powerful concessions when selling an active business asset:
1. The 15-Year Exemption: The Ultimate Reward
If you have owned an active business asset continuously for at least 15 years, are aged 55 or over, and are selling in connection with retirement (or are permanently incapacitated), you may be able to disregard 100% of the capital gain.
In simple terms, there may be no CGT payable.
For many business owners, it is the ultimate reward for years of dedication spent building an enduring and successful enterprise.
2. 50% active asset reduction: Stack it with the CGT discount
Where the 15-year exemption is unavailable, the 50% Active Asset Reduction can still provide significant benefits.
This concession allows eligible business owners to reduce their capital gain by 50% simply because the asset has been actively used in the business. When combined with the general CGT discount, the resulting tax savings can be substantial.
3. The retirement exemption: $500,000 lifetime limit
The Retirement Exemption allows eligible individuals to disregard capital gains up to a lifetime limit of $500,000.
For those under age 55, the exempt amount must generally be contributed to superannuation, creating a valuable retirement funding opportunity. Those aged 55 or over have greater flexibility in how the proceeds are utilised.
This concession is often where the collaboration between your accountant and financial advisor becomes particularly important, ensuring tax outcomes align with your broader retirement and wealth objectives.
4. Small business rollover: Defer, don’t eliminate
Don’t want to pay the tax now? You can defer the gain by reinvesting the proceeds into a replacement active business asset within 2 years. It keeps your capital working for you and buys time for further planning.
Do you qualify? The three basic tests
Before accessing any Small Business CGT Concession, certain eligibility requirements must be satisfied.
- Turnover test: Your aggregated annual turnover must be less than $2 million. This includes connected entities and affiliates, such as a spouse’s business. One of the most significant developments for business owners is the Government’s proposal to increase the turnover threshold from $2 million to $10 million which will broaden access to CGT relief for many growing businesses that were previously excluded.
- Net asset value test: If turnover exceeds $2 million (proposed to increase to $10 million), the total net value of CGT assets owned by you and related entities must be less than $6 million (excluding your family home and superannuation).
- Active asset test: The asset you are selling must have been actively used in carrying on a business, not a passive investment, for at least half of the time you have owned it.
Meeting all 3 opens the door to the concessions. Determining which concessions to apply, in what sequence, and how they integrate with your broader financial position is where strategic advice becomes invaluable.
Why timing matters
The most powerful opportunities rarely occur by accident.
The 15-Year Exemption, in particular, rewards long-term planning. Eligibility is influenced by ownership structures, succession considerations and strategic decisions made years before a sale event.
This is why effective business succession planning should begin well before an exit is on the horizon.
At Boutique Advisers Private Wealth, we believe successful outcomes are achieved through proactive planning, not reactive decision-making. Our Five Pillars framework connects your business interests, investments, superannuation, estate planning and retirement objectives into one cohesive strategy. It’s about preserving wealth, protecting your legacy and creating confidence in what comes next.
Let’s start the conversation
A successful business exit is rarely the result of chance.
It is built through thoughtful planning, strategic guidance and a clear understanding of the opportunities available.
At Boutique Advisers Private Wealth, our approach is founded on genuine relationships, strategic clarity and collaborative advice. We work alongside business owners to navigate complexity, identify opportunities and make informed decisions with confidence.
Whether you are planning a sale in the coming years or simply exploring your options, reviewing your eligibility for the Small Business CGT Concessions could be one of the most valuable financial decisions you make.
After all, you’ve spent years building your business. The right financial advice in Perth can help ensure you retain more of the wealth you’ve worked so hard to create.
