The rules covering the small business 50% active asset reduction are contained in Subdivision 152-C of the Income Tax Assessment Act 1997.
Interaction with other concessions
If you do not qualify for the small business 15-year exemption, the small business 50% active asset reduction may apply to reduce the capital gain.
Unlike the other small business concessions, the small business 50% active asset reduction applies automatically if the basic conditions are satisfied, unless you choose for it not to apply.
For example, you might prefer for it not to apply and instead choose the small business retirement exemption or the small business rollover. Making this choice allows you to achieve the best result for your circumstances, for example a company or trust may make larger tax-free payments under the small business retirement exemption.
Otherwise, the small business retirement exemption or the small business rollover (or both) may apply to the capital gain that remains after applying the small business 50% active asset reduction.
Conditions to be satisfied
To apply the small business 50% active asset reduction, you only need to satisfy the basic conditions. There are no further requirements.