The amount of the capital gain that you choose to disregard (that is, the CGT exempt amount) must not exceed your 'CGT retirement exemption limit' or, in the case of a company or trust, the CGT retirement exemption limit of each CGT concession stakeholder receiving a payment.
An individual's lifetime CGT retirement exemption limit is $500,000, reduced by any previous CGT exempt amounts the individual has disregarded under the retirement exemption. This includes amounts disregarded under former (repealed) retirement exemption provisions. For a company or trust with eight CGT concession stakeholders (four significant individuals and their four spouses where the spouse has a business participation percentage greater than zero), the limit is effectively $4 million ($500,000 for each stakeholder).
A company or trust may determine the percentage of the exempt amount attributable to each stakeholder, having regard to each stakeholder's retirement exemption limit (or remaining limit) and their reasonable benefit limit (see below).
Example
Daryl and his wife Mary each own 50% of the shares in a company and are both significant individuals of the company. The company makes a capital gain and specifies Daryl's percentage of the exempt amount to be 90% (which means that the percentage specified for Mary must be 10%). Daryl's retirement exemption limit is $500,000.
To determine whether his exemption limit is exceeded, Daryl would take 90% of the exempt amount, add that to amounts previously specified and see whether the total exceeds $500,000.