What Is Small Business CGT Concession in Australia?

Companies and trusts can also have additional requirements when accessing certain small business CGT concessions, including rules relating to CGT concession stakeholders and significant individuals.

This is why business accounting and tax planning should not be considered separately when a major business asset or the business itself is being sold.

Common Mistakes to Avoid

One of the biggest mistakes is waiting until after the sale to consider CGT concessions.

Other common issues include assuming that turnover alone determines eligibility, overlooking connected entities, failing to establish whether an asset meets the active asset test, or choosing a concession without considering how it interacts with other available concessions.

Business owners should also keep appropriate records showing ownership, asset use, purchase costs, improvement costs, sale proceeds and other information needed to calculate the capital gain.

Good record keeping can make the process significantly easier when preparing an income tax return and supporting the position taken in relation to a CGT event.

How Professional Tax Planning Can Help

CGT concessions involve detailed rules, and the best outcome is not always achieved by simply choosing the concession that appears to provide the largest immediate reduction.

A professional can review the proposed transaction, business structure, asset history and financial position before the sale occurs.

This is where tax accounting and strategic tax planning can be particularly useful. Reviewing the transaction in advance may identify potential issues and allow the business owner to understand the likely tax consequences before committing to a sale.

For businesses considering a sale, restructure or major asset transaction, obtaining advice early can be much more effective than trying to correct a tax position after the CGT event has already happened.