Small Business 15-Year Exemption: A Complete Guide for Australians

 

Running a small business in Australia often means managing property or assets over many years, and selling them can trigger a significant capital gains tax (CGT) bill. The small business 15-year exemption is a powerful concession that allows eligible business owners to sell qualifying business assets tax-free if they meet the requirements. This exemption can provide major financial relief when planning for retirement, succession, or business changes, making it one of the most valuable CGT concessions available under the Income Tax Assessment Act 1997.

To be eligible, you must have owned an active business asset—such as land, property, or equipment—for at least 15 years. At the time of sale, you need to be either 55 years or older and retiring, or permanently incapacitated. Small business eligibility rules also apply, including the $2 million turnover or $6 million net asset tests. For trusts and companies, a significant individual (holding at least 20% interest) must be involved for the full ownership period. Meeting these requirements allows business owners, landholders, and farmers to potentially eliminate all CGT on the sale of long-held assets.

The exemption not only means zero CGT on qualifying asset sales but also opens opportunities for tax-free contributions to superannuation, boosting retirement savings. It is especially valuable for regional landowners and farmers transitioning property to the next generation. However, rules are complex and vary with ownership structures, retirement status, and rollover provisions. Seeking professional tax advice is essential, as tailored guidance can make the difference between a large tax bill and a tax-free outcome.

Originally Published: https://www.starinvestment.com.au/15-year-exemption/