The capital gains
tax (CGT) retirement exemption allows your small business to sell active business assets and disregard some or all of the resulting capital gain – meaning also disregarding the associated CGT – as long as you use the money from the sale in connection with your retirement.
You, your business and the asset sale (known as the "CGT event") have to meet a range of conditions to be eligible for this CGT retirement exemption.
As for all of the small business concessions, you need to be considered a "small business entity" for the income year, which means you must be a sole trader, partnership, company or trust that operates a business during the income year and has an aggregated turnover of less than $2 million.
The asset sold must be an "active business asset", which generally means it needs to be used (or held ready to be used) in carrying on your small business, and must have been "active" in this way for a sufficient period (as specified in the tax law).
Although this concession's called the "retirement exemption", no age limit applies and there's no requirement for you to retire or stop doing business.
Here are some other important factors:
The other conditions to meet for the CGT retirement exemption are different depending on whether you own the business asset as an individual or it's owned by a company or a trust. The company and trust conditions are somewhat more complicated, because they need to ensure the CGT concession can be passed along to benefit the retirement of the individual people who own or control the company or the trust.
Where a company or trust owns and makes a capital gain on an active business asset, and it wants to apply the CGT retirement exemption:
Want to find out more?
These rules may sound complicated, but applied properly and combined with the other general and small business CGT concessions available, the CGT small business retirement exemption could help you reduce the amount of CGT you have to pay, as well as significantly boosting your retirement savings.
Contact us to find out more about how the small business CGT concessions could work for you.
Call us at Robert Goodman Accountants on 07 3289 1700 or email us at
reception@rgoodman.com.au
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© Copyright 2017. All rights reserved. Source: Thomson Reuters. This communication does not constitute financial advice and does not consider your personal circumstances. Please contact a licensed financial planner for advice tailored to your financial circumstances. Brought to you by Robert Goodman Accountants
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