Basic eligibility
You need to meet one of these, plus the active asset test:
- Small business entity: aggregated turnover under $2 million (for the CGT concessions; $10 million for the 50% active asset reduction from 2027–28), or
- Maximum net asset value test: net CGT assets of you, your affiliates and connected entities not more than $6 million (excluding your home to the extent used privately, and super).
Active asset test: the asset was used in carrying on a business for at least half the ownership period (or 7.5 years if owned more than 15 years). Extra conditions apply to shares and trust interests.
The four concessions
| Concession | Effect | Key conditions |
|---|---|---|
| 15-year exemption | Whole gain disregarded | Owned continuously for 15 years; 55 or older and retiring, or permanently incapacitated |
| 50% active asset reduction | Gain halved (on top of the 50% discount) | Basic conditions only |
| Retirement exemption | Up to $500,000 lifetime exempt | If under 55, the amount must be paid into super |
| Rollover | Gain deferred | Replacement active asset acquired from 1 year before to 2 years after |
Example
A sole trader sells goodwill they have owned for 8 years for a $400,000 gain. 50% CGT discount → $200,000. 50% active asset reduction → $100,000. Retirement exemption on the remaining $100,000 (paid into super if under 55) → $0 taxable.
Companies and trusts
Companies pay 25% or 30% on the full gain (no discount) and can apply all four concessions (the 15-year and retirement exemptions need a significant individual or CGT concession stakeholder); distributing exempt amounts to shareholders has its own rules. Trusts can pass the discount and concessions to beneficiaries. Get advice on structure before a sale – it can’t be fixed afterwards.
2026 announcements
The 2027 CGT reform keeps all four small business concessions. A Senate amendment to the Tax Reform No. 1 Act 2026 means that from the 2027–28 income year the 50% active asset reduction is available to businesses with aggregated turnover under $10 million (instead of $2 million). The 15-year exemption, retirement exemption and rollover still use the $2 million turnover or $6 million net asset tests. The Government has also announced an Innovative Business CGT Concession for start-up founders and investors (consulted on in July 2026); it isn’t law yet.
Frequently asked questions
How much is capital gains tax on a business sale?
It depends on the structure and concessions. An individual who qualifies for the 50% discount and the 50% active asset reduction includes only 25% of the gain in taxable income; the retirement exemption or 15-year exemption can reduce it further or to nil.
Is goodwill subject to CGT?
Yes. Goodwill is a CGT asset; its sale is usually a capital gain eligible for the small business concessions if the conditions are met.
Do companies pay capital gains tax?
Yes, at the company rate (25% for base rate entities or 30%), with no CGT discount. Companies can access all four small business concessions; the 15-year and retirement exemptions also need a significant individual or CGT concession stakeholder.
References
Every figure on this page was checked against these primary sources on 16 October 2026.
General information only – not financial or tax advice. See our disclaimer. Spotted an error? Email hello@cgtcalculatoraustralia.com.