Proposed change to CGT small business concessions

Small business turnover threshold for the CGT small business concessions will increase to $10m from the current $2m. This change is proposed to apply from 1 July 2027. Currently, one access condition, for the CGT small business concession is that the taxpayer (or affiliate or connected entity) carries on a business with a turnover (on an aggregated basis) of less than $2m.

Curiously, the short (one paragraph) announcement only refers to the change in the context of the “50% active asset reduction” concession rather than in the context of the basic eligibility conditions for accessing the four different CGT small business concessions.

Currently, the basic eligibility conditions are set out in Subdivision 152-A. If the basic conditions are satisfied, then additional conditions apply for the 15-year concession (set out in Subdivision 152-B) and the retirement concession (set out in Subdivision 152-D). No further condition applies to the 50% active asset concession (set out in Subdivision 152-B) or the rollover concession (set out in Subdivision 152-E). However, a taxpayer who is entitled to the 50% active asset concession, may elect not to apply that concession but apply the retirement concession or rollover concession instead.

Surely, it is not the proposed policy that the current $2m turnover threshold will remain for the 15-year, retirement and rollover concessions but a higher $10m turnover threshold will apply for the 50% active asset threshold? We will wait and see.