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Order in which to apply the discount and concessions

Last updated 9 September 2007

Note that you make a capital gain from a depreciating asset only to the extent that you have used the depreciating asset for a non-taxable purpose. Step 1: Determine whether you satisfy the basic conditions for the small business CGT concessions. If so, go to step 2. If not, go to step 3. Step 2: Determine whether you qualify for the small business 15-year exemption (not relevant to capital gains from depreciating assets). If yes, disregard the entire capital gain. You don't need to apply any of the other CGT concessions. Step 3: Offset any capital losses against the capital gain. Step 4: Determine whether you are eligible for the CGT discount. For recent changes go to CGT discount. If so, reduce the remaining capital gain. Go to step 5. Step 5: Determine whether the capital gain is from a depreciating asset and used at least partly for a non-taxable purpose. If so, you are not eligible for any other concessions and can't reduce your capital gain any further. If not, go to step 6. Step 6: Determine whether you qualify for the small business 50% active asset reduction (if you answered yes at step 1 you will qualify). If so, reduce the remaining capital gain. You can choose not to apply the 50% active asset reduction and go straight to the small business retirement exemption or rollover in step 7. Step 7: Determine whether you qualify for the small business retirement exemption or rollover. If so, reduce the remaining capital gain. Amount remaining equals the net capital gain to be included in your assessable income for the year. Keep the necessary CGT records.

QC27357