Small Business CGT Concessions – The Good, The Bad and The Ugly

This post is an excerpt from the paper 'Small Business CGT Concessions – The Good, The Bad and The Ugly', this month's free technical paper for members.

The questions that clients selling their businesses ask are – how much tax do I have to pay? And, is there any way to reduce it?

If the client can access the small business tax concessions, their tax can reduce significantly and, in some cases, be eliminated altogether.

However, recently enacted integrity measures and increased ATO review activity make these concessions an area where extreme caution should be exercised.

In their paper, presented in Melbourne in June 2019, Neil Brydges, CTA, and Matthew Meng addresses the application of the specific capital gains tax (CGT) concessions available to small businesses.

Speaking to us prior to the event, Matthew said “this is a highly technical area, practitioners really need to track through the detailed requirements in every case”.

The paper provides an overview of the CGT concessions that small business owners can access to reduce or eliminate the tax on the sale of their business.

It looks at the recently enacted retrospective ‘integrity measures’ announced in the 2017 Federal Budget which are designed to prevent taxpayers from accessing the concessions ‘inappropriately’.

Finally, it provides some practical tips to practitioners to manage this extremely technical and complex area of law.

As Neil and Matthew state in the paper, "Following the amendments to the small business CGT concessions that apply from 8 February 2018, the application of the concessions now involves an even greater degree of complexity to an already complicated set of rules. This complexity is added to when restructuring arrangements entered into to access the concessions are considered in the context of the tax anti-avoidance rules. This risk can be lessened by ensuring appropriate contemporaneous documentary evidence is prepared and retained in the context of transactions and seeking specialist advice."

Members, you can access their paper here.

Not a member? Find out more about the benefits membership of The Tax Institute can deliver for your role.

Neil Brydges, CTA, is a Principal Lawyer in Sladen Legal’s tax group. Neil practises in all areas of direct and indirect tax with a focus on the taxation of trusts, corporate tax, mergers and acquisitions, and Division 7A.

He is an Accredited Specialist in Taxation Law and Chair of the Tax & Revenue Law Committee with the Law Institute of Victoria and a Chartered Tax Advisor and member of the SME, Dispute Resolution, and GST Technical Committees with The Tax Institute.

Matthew Meng is a barrister specialising in tax. Matthew has 10 years experience in tax dispute resolution and tax advisory. His experience encompasses both federal and state taxes.

He acts for taxpayers and for the Commissioner of Taxation. Prior to joining the Victorian Bar, Matthew was a Senior Associate in the tax group at King & Wood Mallesons.


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