Amendments to the small business capital gains tax (CGT) concessions were introduced into parliament in the Treasury Laws Amendment (Tax Integrity and Other Measures) Bill 2018 (AITB: 114-080) on 28 March 2018 and passed by the House of Representatives on 10 May 2018. This follows the release of an exposure draft on 8 February 2018.

CGT Amendments Introduce Unnecessary Complication for Small Business

The small business CGT concessions contain additional basic conditions where the CGT asset subject to disposal is shares in a company or interests in a trust. Before these changes, the additional basic conditions required that either the taxpayer was a CGT concession stakeholder in the object company or trust, or CGT concession stakeholders in the object company or trust together have a small business participation percentage in the taxpayer of at least 90%.

The amendments made by the Bill expand the additional basic conditions to:

  1. exclude the small business entity/turnover test in certain circumstances
  2. add a modified active asset test
  3. add a separate and modified net asset value test to be applied to the object entity.

The amendments are stated to address a number of integrity issues.

Source: Issue 23 Wolters Kluwer