Small business CGT concessions

The small business CGT concessions (aggregated turnover under $2 million – not $10 million) are important, but very complex. Disputes with the ATO about the concessions are not uncommon.

In good news for small business, the Full Federal Court recently found that as the small business CGT concessions are intended to “help small business”, they should be construed beneficially rather than restrictively.

This approach assisted a taxpayer (Mr E) who sold a property used to store materials, tools, equipment and vehicles used in a building, bricklaying and paving business operated by Mr E (and his wife) through a family trust. Some materials, etc. were stored in two 4m × 3m sheds and other materials, etc. were stored in the open. The property was visited a number of times a day in between jobs and tools and other items were collected on a daily basis.

The Court decided that the property was “used, or held ready for use, in the course of carrying on a business” and was therefore an “active asset”. This meant that Mr E could access the small business CGT concessions to reduce the capital gain made on the sale of the property.

Tip! If you are thinking about selling a business or business assets, talk to your tax adviser about how to minimise the tax that might be payable if you make a profit on the sale.

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