Taxation & Estate Planning
Using the small business CGT concessions for super
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If you are a small business owner, the capital gains tax (CGT) small business concessions allow you to increase your retirement savings significantly. Fortunately, the maximum thresholds for the concessions have not been reduced from 1 July 2017, unlike the contribution caps, but they can be complex to understand. This article covers the two parts which make up the concession - the 15-year asset exemption and the small business retirement exemption.

Amounts transferred to superannuation under the small business concession will increase your fund balance. This can impact on your ability to make non-concessional contributions which are determined by your total superannuation balance at the end of the previous financial year. Also, the small business amount can be transferred to the fund if you meet the same tests for making non-concessional contributions. These depend on the member's age and whether a work test has been met after age 65.

If you use the capital gains from a small business concession for retirement or superannuation purposes, a lifetime cap of $1.48 million, which is indexed, applies. The amount available under the CGT concession cap depends on how the CGT concessions are used. In effect, there are two parts to the cap, the lifetime cap and the small business retirement cap, which falls under the lifetime cap. The overall cap is indexed while the retirement exemption cap is set at $500,000. This is outlined in the following table:

Income year Lifetime CGT amount Retirement exemption cap amount
2018/19 $1,480,000 $500,000
2017/18 $1,445,000 $500,000
 

Amounts claimed under the $500,000 retirement exemption cap reduce the amount available under the lifetime CGT cap.

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