People with small assets (including shares and small business CGT concessions) will not have to pay additional tax on capital gains when they dispose of those assets, provided the asset price does not exceed $1 million. This concession will apply until the CGT discount was increased in 2021.
Small businesses CGT concessions 2021 at Mosaic Tax Legal are the backbone of the Australian economy. They employ nearly one in five Australians and contribute to the wealth of our community. However, they can be subject to some of the key tax anomalies that impact all Australians. Small businesses don’t pay Capital Gains Tax (CGT) on the first $1 million of their business assets. This concessional treatment extends to all businesses with an annual turnover of less than $10 million and where the owner has a marginal tax rate (MRRT) of 28 per cent or less. The $1 million threshold increases in 2021 to $2 million, so that small businesses will still pay no CGT on the first $2 million of their business assets.
Small business owners often pay tax on business income twice when they earn it and again when they pay tax on their taxable income. To help reduce this double-taxation burden, the government offers a number of small business concessions.
CGT is a tax when you sell an asset for more than you paid for it. For example, when you sell an asset, you have owned for more than 12 months. This could include selling a business or investment property, shares, a business or rental property, or a car or other motor vehicle. CGT exceptions include vehicles used exclusively in business, holiday homes, collectible assets, assets held as investments, and assets held for passive applications. CGT is often referred to as ‘capital gain’ when selling an asset, but your small business CGT concessions are called ‘capital gains.
Do you own an active asset used in a small business? If so, you can claim small business CGT or capital gains tax concessions to reduce your capital gain when you sell the asset.