NEW ADDITIONAL CRITERIA FOR ACCESSING THE SMALL BUSINESS CGT CONCESSIONS
Recent legislative changes have resulted in additional restrictions on the ability of equity holders to access the small business CGT Concessions on the disposal of shares in a Company or Units in a Trust.
Under one of the changes the object entity itself (i.e. the entity that you own shares or units in) now needs to be either a small business entity or needs to pass the $6,000,000 Maximum Net Assets test just before the CGT event.
The new test above is made more difficult to satisfy by another change whereby one entity is treated as controlling another entity if it has an interest in that entity of 20% or more. These interests will now need to be included into the aggregate turnover or the net value of the CGT assets.
Whilst the stated intent of the legislation was to stop taxpayers inappropriately accessing the small business CGT Concessions, it perhaps goes too far in addressing this.
It’s important for taxpayers to be aware that the Small Business CGT Concessions are still available on the disposal of shares and units, however care needs to be taken to ensure that a taxpayer doesn’t inadvertently become ineligible for the concessions.