Government urged to revise $6m maximum net asset value with CGT reforms

“This is the threshold at which small business owners are eligible for CGT concessions on the sale of their business or a business asset, and it currently is not indexed for inflation. Indeed, it was last increased from $5 million to $6 million as part of the 2007 small business tax changes, which means it has remained broadly unchanged for nearly 20 years.”

In this way, the threshold is no longer a fit for many small business owners, especially those considering any form of sale.

An increase to $10 million or $12 million, he continued, “would help many more owner-managed businesses access concessions that were designed for them”, Bembrick said.

Greater clarification is also being demanded, with the higher turnover threshold for the 50 per cent asset reduction to $10 million not clearly stipulated as relating to that particular tax concession, or in addition to the 15-year exemption, retirement exemption and rollover, he said.

“At the moment, it appears the higher $10 million threshold is tied specifically to the 50 per cent active asset reduction, and that leaves real uncertainty around the other three concessions.”

Bembrick said that this answer may prove more impactful for asset sales than share sales.

“This is because additional eligibility conditions apply where the asset being sold is a share or trust interest, and the MNAC test often remains the key gateway in those cases.”

“Until the draft legislation is released, business owners planning a sale, succession event or restructure should avoid assuming the headline announcement will automatically open up the full suite of Div 152 concessions.”