Budget 2017: Rules tightened for small business capital gains tax concessions

Small businesses will face stricter rules for capital gains tax (CGT) concessions from July as the government seeks to weed out operators who are incorrectly accessing the tax breaks.

From July 1, the government will seek to amend the CGT concessions rules for small business so that business owners can only access the concessions for assets that are used in a small business or in relation to ownership interests in a small business.

While the government has not put a figure on how much revenue it expects to gain from the measure, it said some taxpayers have been receiving the concessions when they shouldn’t be.

“The concessions assist owners of small businesses by providing relief from CGT on assets related to their business, which helps them to re-invest and grow, as well as contribute to their retirement savings through the sale of the business,” the government explained in its budget papers.

“However, some taxpayers are able to access these concessions for assets which are unrelated to their small business, for instance through arranging their affairs so that their ownership interests in larger businesses do not count towards the tests for determining eligibility for the concessions.”

However, the government said in the budget papers that it does not intend to change the turnover threshold at which small business owners can access the concessions, despite doing so for other small business tax concessions in legislation passed by the Senate earlier this year.

Small business CGT concessions will continue to be available to small businesses with annual turnover under $2 million, or business assets under $6 million.

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