Small Business CGT Concessions (Part 3)

By Bjorn Kirberg

In Part 1 and Part 2 we covered the basic conditions of the CGT Small Business Concessions.

Part 3 will cover the common scenario where the asset being sold is a share in a company or an interest in a trust.  This is especially helpful in Queensland to avoid stamp duty.

If the asset being sold is a share in a company or an interest in a trust, it must meet additional conditions outlined below.  These rules were expanded in 2018 to ensure that the entity itself being sold could not be worth more than $6 million, which significantly narrowed the number of taxpayers eligible.

(1) Just before the CGT event, either:

(i) The taxpayer must be a CGT concession stakeholder in the company or trust; or

(ii) CGT concession stakeholders in the company or trust had a total small business participation percentage in the taxpayer claiming the concession of at least 90%.

(2) Unless the taxpayer satisfies the maximum net asset value test, it must be carrying on a business just prior to the CGT event.

(3) The company or trust must either be a CGT small business entity (below $2 million aggregated turnover) for the income year or satisfy the maximum net asset value test (net assets below $6 million).

(4) The share in the company or interest in the trust must satisfy a modified active asset test (MAAT).  Work out the total market value of both:

(i) the assets of the company or trust and

(ii) the assets of any later (interposed) entity in which the taxpayer has a small business participation percentage, multiplied by that percentage.

To meet the MAAT, at least 80% (the 80% test) of the above assets must be made up of:

• active assets and

• cash or financial instruments inherently connected with the business carried on by the company/trust or a later entity


A CGT Concession stakeholder of a company or trust is a significant individual in the company or trust, or the spouse of a significant individual where the spouse has a small business participation percentage in the company or trust.

Small business participation percentage is the sum of the direct and indirect small business participation interests.

A significant individual has a small business participation percentage in the company or trust of at least 20%.

These rules are very complex and this is just an overview. Please contact us if you would like to discuss further or have any questions

The information in this blog is intended only to provide a general overview and has not been prepared with a view to any particular situation or set of circumstances. It is not intended to be comprehensive nor does it constitute advice. While we attempt to ensure the information is current and accurate we do not guarantee its currency and accuracy. You should seek professional advice before acting or relying on any of the information in this blog as it may not be appropriate for your individual circumstances.

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