The rules covering the small business rollover are contained in Subdivision 152-E of the Income Tax Assessment Act 1997. The small business rollover allows you to defer all or part of a capital gain made from a CGT event happening to an active asset.
Interaction with other concessions
You may choose to apply the small business rollover to as much of the capital gain as you decide:
- after the small business 50% active asset reduction - that is, to the remaining 50% (or if the CGT discount has also applied, the remaining 25%) of the capital gain after you have applied capital losses, or
- instead of the small business 50% active asset reduction - that is, to the capital gain remaining after you have applied any capital losses and CGT discount. Making this choice might ultimately allow a company or trust to make larger tax-free payment under the small business retirement exemption if they choose the retirement exemption after the deferred capital gain has crystallised - for example, when the replacement asset is later sold.
You may instead choose the small business retirement exemption if its conditions are satisfied, or you may choose both concessions for different parts of the remaining capital gain.