Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES

PART 3-3 - CAPITAL GAINS AND LOSSES: SPECIAL TOPICS

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Division 152 - Small business relief

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Subdivision 152-A - Basic conditions for relief under this Division

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SECTION 152-5 What this Subdivision is about

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This Subdivision sets out some basic conditions for relief. If the basic conditions are satisfied, an entity may be able to reduce its capital gains using the small business concessions in this Division.

The 2 major basic conditions are:

(a) the entity must be a CGT small business entity or a partner in a partnership that is a CGT small business entity, or the net value of assets that the entity and related entities own must not exceed $6,000,000; and

(b) the CGT asset must be an active asset.

Additional basic conditions must be satisfied in the following circumstances:

(a) the CGT asset is a share in a company or an interest in a trust;

(b) the CGT event involves certain rights or interests in relation to the income or capital of a partnership.

Some of the concessions have additional, specific conditions that also must be satisfied. For example, the 15-year exemption applies only if you have held the CGT asset for at least 15 years and you retire.

There are limitations on the availability of the small business concessions for CGT events J2, J5 and J6.

You do not need to satisfy the basic conditions for the retirement exemption in relation to CGT events J5 and J6.

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History

S 152-5 amended by No 95 of 2019, s 3 and Sch 2 item 1, by substituting " Additional basic conditions must be satisfied in the following circumstances: (a) the CGT asset is a share in a company or an interest in a trust; (b) the CGT event involves certain rights or interests in relation to the income or capital of a partnership. " for " Additional basic conditions must be satisfied if the CGT asset is a share in a company or an interest in a trust. " , effective 1 January 2020 and applicable in relation to CGT events happening after 7.30 pm, by legal time in the Australian Capital Territory, on 8 May 2018.

S 152-5 amended by No 124 of 2018, s 3 and Sch 2 item 1, by substituting " The 2 major basic conditions are: " and subsequent para (a) and para (b) for " The 3 major basic conditions are: " and subsequent para (a), (b) and (c), effective 1 January 2019 and applicable in relation to CGT events happening on or after 8 February 2018. S 152-5 major basic conditions formerly read:

The 3 major basic conditions are:

(a) the entity must be a CGT small business entity or a partner in a partnership that is a CGT small business entity, or the net value of assets that the entity and related entities own must not exceed $6,000,000;

(b) the CGT asset must be an active asset;

(c) if the asset is a share or interest in a trust, there must be a CGT concession stakeholder just before the CGT event, and the entity claiming the concession must be a CGT concession stakeholder in the company or trust or CGT concession stakeholders in the company or trust must have a small business participation percentage in the entity of at least 90%.

S 152-5 amended by No 41 of 2017, s 3 and Sch 3 item 1, by substituting para (a), effective 1 July 2016. For application provision, see note under s 328-357 . Para (a) formerly read:

(a) the entity must be a small business entity or a partner in a partnership that is a small business entity, or the net value of assets that the entity and related entities own must not exceed $6,000,000;

S 152-5 amended by No 42 of 2009, s 3 and Sch 2 item 22, by substituting the two paras beginning with (and including) " There are limitations " for the para beginning with (and including) " There are limitations " , effective 23 June 2009. For transitional provision relating to choice, see note under s 152-10(1) . The para formerly read:

There are limitations on the availability of the small business concessions for CGT events J2, J5 and J6.

S 152-5 amended by No 80 of 2007 , s 3 and Sch 4 items 1 and 2, by substituting " an entity " for " then a small business entity " and substituting para (a), applicable to CGT events happening in the 2007-08 income year and later income years. Para (a) formerly read:

(a) a limit of $5,000,000 on the net value of assets that the business and related entities own;

S 152-5 amended by No 55 of 2007 , s 3 and Sch 1 items 18 and 19, by substituting para (c) and substituting " There are limitations on the availability of the small business concessions for CGT events J2, J5 and J6. " for " The small business concessions (apart from small business roll-overs and the small business retirement exemption) are not available for CGT events J2 and J3. " , applicable to CGT events happening in the 2006-07 income year or later income years. Para (c) formerly read:

(c) if the asset is a share or interest in a trust, there must be a controlling individual just before the CGT event and the entity claiming the concession must be a CGT concession stakeholder in the company or trust.

S 152-5 amended by No 41 of 2005 and inserted by No 165 of 1999 (as amended by No 173 of 2000).

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