The small business CGT concessions are four Australian tax breaks that can reduce, disregard or defer the capital gain when you sell an active asset used in a small business: the 15-year exemption, the 50% active asset reduction, the retirement exemption and the roll-over. To qualify you must first be a small business with aggregated turnover under $2 million or pass the $6 million maximum net asset value test, as of October 2026.
Used together, they can take a large business sale down to little or no tax, which is why they're worth understanding before you sell, not after. Everything below comes from the ATO's small business CGT concession pages, checked in October 2026.
The basic eligibility conditions
- Be an eligible entity: a CGT small business entity with aggregated turnover of less than $2 million, or pass the maximum net asset value test, or hold an asset used in an affiliate's or connected entity's small business, or be a partner in a small business partnership.
- The asset must pass the active asset test.
- If the asset is a share in a company or an interest in a trust, extra conditions apply.
- If the CGT event involves rights to partnership income or capital after 8 May 2018, a further partnership condition applies.
Depreciating assets don't qualify. Aggregated turnover includes the turnover of any affiliates and connected entities, and you check eligibility every year.
The $6 million test
The maximum net asset value test is met if the net value of CGT assets owned by you, entities connected with you and your affiliates (only assets used in your business) doesn't exceed $6 million just before the CGT event. Net value is market value less related liabilities and provisions for annual leave, long service leave, unearned income and tax. The ATO notes the $6 million limit isn't indexed for inflation, so it doesn't rise as asset values do.
The active asset test
An asset is active if you, an affiliate or a connected entity use it or hold it ready for use in running a business. It passes the test if it's been active for at least 7.5 years (if you've owned it more than 15 years) or at least half the ownership period (if 15 years or less). The periods don't need to be continuous.
The ATO's example: Jodie owned a shop for 8 years, ran her florist business there for 5, then leased it out for 3 before selling. It still passes, because it was active for more than half her ownership. Assets mainly used to earn rent, interest, royalties or annuities, subdivided vacant land and financial instruments generally can't be active assets.
The four concessions
| Concession | What it does | Key extra condition |
|---|---|---|
| 15-year exemption | No CGT at all on the gain | Owned the asset for 15 years and you're 55 or older and retiring, or permanently incapacitated |
| 50% active asset reduction | Cuts the remaining gain by 50% | None beyond the basic conditions; applies automatically unless you choose otherwise |
| Retirement exemption | Disregards gains up to a $500,000 lifetime limit | Under 55: the exempt amount goes into super |
| Roll-over | Defers the gain | Buy a replacement active asset or make capital improvements within 2 years |
How they stack: the ATO's example
Lana sells business land she's owned for more than 12 months for a capital gain of $17,000, and has a $3,000 capital loss elsewhere, as of October 2026. After the loss she has $14,000. The 50% CGT discount takes it to $7,000, and the 50% active asset reduction takes it to $3,500. In the ATO's roll-over example she then defers that $3,500 by buying adjoining land for $10,000 within the replacement period.
The order matters. You must choose the 15-year exemption and apply it first, and you don't have to use capital losses against the gain before applying it. Once it applies, nothing else is needed.
Retirement exemption and super
You don't have to stop working to use the retirement exemption, but you must keep a written record of the amount you choose to disregard. If you're under 55, the exempt amount has to be paid into a complying super fund or retirement savings account, and you notify the fund with a CGT cap election form so it counts towards your CGT cap rather than your non-concessional cap. Over 55, there's no super requirement. Companies and trusts pay it out to their CGT concession stakeholders, generally within 7 days.
The roll-over catch
If you choose the roll-over and haven't bought a replacement asset or made capital improvements by the end of the replacement period, generally 2 years after the CGT event, CGT event J5 happens and the deferred gain comes back. In the ATO's example, Luke rolled over an $80,000 gain in September 2020, had no replacement asset in September 2022, and made an $80,000 capital gain then. You can still use the retirement exemption on that gain, but not the discount, the 50% reduction or the 15-year exemption.
If you're selling up, link these rules to your super planning and the superannuation guarantee you already pay staff, and remember any gain still affects your PAYG instalments for the year.
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Exempt distributions from a company or trust
When a company or trust uses the 15-year exemption, it can pass the exempt amount to its CGT concession stakeholders tax-free, within limits set by each person's participation percentage. In the ATO's example, Joe owns 60% and Anne 40% of a company that disregards a $10,000 gain: Joe can receive $6,000 and Anne $4,000 tax-free, as of October 2026. The payment generally has to be made within 2 years of the CGT event.
The verdict
Check the $2 million turnover and $6 million net asset tests before you sign a sale contract, because they're measured just before the sale. If you've owned the asset 15 years and you're retiring at 55 or over, the 15-year exemption can remove the gain completely. Otherwise, the 50% reduction plus the retirement exemption usually does most of the work, and the roll-over only helps if you'll buy a replacement within 2 years.
Frequently asked questions
What are the 4 small business CGT concessions?
The small business 15-year exemption, the 50% active asset reduction, the retirement exemption and the small business roll-over.
What turnover do I need to qualify?
As a CGT small business entity, aggregated turnover of less than $2 million. Otherwise you may qualify through the $6 million maximum net asset value test.
What is the retirement exemption limit?
Capital gains from active assets can be disregarded up to a lifetime limit of $500,000 per individual or CGT concession stakeholder.
Must I retire to use the retirement exemption?
No. The ATO says you don't need to end your employment, business office holdings or business activities.
How long is the roll-over replacement asset period?
The replacement asset period generally ends 2 years after the CGT event, and the ATO can extend it.
Can a company pass the 15-year exemption to its shareholders?
Yes, within limits. Distributions of the exempt amount to CGT concession stakeholders, up to each person's participation percentage, aren't assessable income.
