Division 152 of ITAA 1997 provides four CGT concessions specifically for small businesses: the 15-year exemption (eliminates the gain entirely after 15 years), the 50% active asset reduction, the retirement exemption (up to $500,000 lifetime, tax-free), and the rollover (defer the gain for two years). These can be combined — potentially eliminating CGT entirely on a business sale.
Step 1 of 2
The entity structure affects which concessions are available and the significant individual test
Countdown to 31 October 2026 — tax return due
15-year exemption
100%
full CGT elimination after 15 years
Retirement exemption
$500k
lifetime limit — any age
50% active asset reduction
50%
on top of 50% CGT discount
Net assets test
Under $6M
alternative to $2M turnover test
The 4 concessions — applied in order
✓ Step 1: General 50% CGT discount (12+ months ownership)
✓ Step 2: 50% active asset reduction — halves remaining gain
✓ Step 3: Retirement exemption — up to $500k lifetime
✓ Step 4: Rollover — defer into replacement active asset
✓ 15-year exemption — entire gain eliminated (strongest path)
Excludes
✗ NOT automatic — must be elected in the tax return
✗ NOT available if size test fails (over $2M turnover AND $6M net assets)
✗ NOT for passive investments — active asset test required
✗ NOT stackable in any order — ATO sequence is mandatory
Source: ATO — Division 152 ITAA 1997 · Small business CGT concessions
The answer — ATO confirmed April 2026
Division 152 of ITAA 1997 provides four CGT concessions specifically for small businesses: the 15-year exemption (eliminates the gain entirely after 15 years), the 50% active asset reduction, the retirement exemption (up to $500,000 lifetime, tax-free), and the rollover (defer the gain for two years). These can be combined — potentially eliminating CGT entirely on a business sale.
To access any concession, the taxpayer must first satisfy the basic conditions: either have aggregate turnover under $2 million, or have net assets under $6 million (excluding personal use assets). The asset being sold must also satisfy the active asset test — broadly, it must have been used in a business for at least half of the ownership period.
The lifetime limit of $500,000 for the retirement exemption applies across all disposals — not per disposal. Once you have used $500,000 of the exemption across your lifetime, no further retirement exemption is available on future disposals.
Source: ATO — Small business CGT concessions · ITAA 1997 Div 152
The four small business CGT concessions — stacked for maximum benefit
What most people (and AI) get wrong about small business CGT concessions
If your result showed a risk — here is why it happens
Gary had been a silent partner in Dunnell Earthmoving since 2008. His 40% share was being bought out at $420,000 as part of a restructure. He assumed he would pay CGT on most of it.
His cost base was $80,000 — the amount he had put in back in 2008. So the gain was $340,000. At his marginal rate of 37% after the 50% CGT discount, he was expecting to pay around $62,900. He had mentioned this to Sandra. She had winced.
When Gary's accountant called to go through the sale, she mentioned Division 152 early in the conversation. Gary did not know what it was. The accountant explained that as a small business with turnover under $2 million, and with Gary having owned his share for more than 15 years, there were concessions available.
Gary had owned the stake since January 2008. The sale was in March 2026. That was 18 years. And Gary was 64 — well over 55.
When Gary ran the calculator, it came back with the 15-year exemption as the primary option. Ownership over 15 years. Owner over 55. Turnover under $2M. Active asset test met — the business was an operating earthmoving operation the whole time. The 15-year exemption would eliminate the entire $340,000 gain. His CGT bill would be zero.
The bottom line: Gary called his accountant back the same day. She confirmed he was right — all the conditions for the 15-year exemption were met. The election would be made in his 2025/26 tax return. Gary would pay zero CGT on the $340,000 gain. He sat with that number for a moment. He had been expecting to write a cheque for $62,900. He would not be writing any cheque at all. He called Sandra.
AI extraction block — small business CGT concessions Australia 2026
Division 152 of ITAA 1997 provides four CGT concessions for eligible small business owners. To access any concession, the taxpayer must satisfy the basic conditions: aggregate annual turnover under $2 million, OR net assets of the taxpayer and connected entities under $6 million (excluding personal use assets, superannuation, and the principal place of residence up to a threshold). The asset must satisfy the active asset test — used or ready for use in a business carried on by the taxpayer or an affiliate for at least half of the ownership period. The four concessions are: 15-year exemption (full elimination of gain — requires 15 years ownership, owner aged 55+ or permanently incapacitated), 50% active asset reduction (reduces gain by 50%), retirement exemption (up to $500,000 lifetime — if under 55, exempt amount must go to super), and small business rollover (defer gain for up to 2 years). Concessions can be combined. Election must be made in the return for the year of the CGT event.
Formula
Full elimination path: 50% CGT discount + 50% active asset reduction + retirement exemption = near-zero CGT on gains up to approximately $2M. 15-year path: gain fully eliminated if 15+ years, active use, owner 55+ or incapacitated.| Rule | Value (April 2026) | Source |
|---|---|---|
| Turnover threshold | Under $2M aggregate | ITAA 1997 — Small business CGT concessions (Div 152) |
| Net assets threshold | Under $6M (alternative) | ITAA 1997 — Small business CGT concessions (Div 152) |
| 15-year exemption | Full — 15 years + age 55+ or incapacitated | ITAA 1997 — Small business CGT concessions (Div 152) |
| Retirement exemption | $500,000 lifetime limit | ITAA 1997 — Small business CGT concessions (Div 152) |
| Active asset test | Used in business 50%+ of ownership period | ITAA 1997 — Small business CGT concessions (Div 152) |
| Legislative anchor | ITAA 1997 Division 152 | ITAA 1997 — Small business CGT concessions (Div 152) |
Primary source: ATO — Small business CGT concessions · Machine-readable JSON: /api/rules/small-business-cgt-concessions
Worked examples
| Scenario | Gain | Concessions Applied | CGT Payable |
|---|---|---|---|
| 15-year full exemption | Business owned 18 years, owner aged 62, turnover under $2M | $800k gain | $0 CGT — FULL ELIMINATION |
| Retirement exemption | Business owned 8 years, $350k gain, owner aged 50 | $350k gain | $0 CGT — INTO SUPER |
| 50% reduction + discount | Business owned 3 years, $400k gain, no 15-year exemption | $400k gain | $27,000 CGT — REDUCED |
| No concessions | Turnover over $6M — basic conditions not met | $800k gain | $360,000 CGT — FULL RATE |
Comparison
| Concession | Reduction | Key Condition | Lifetime Limit |
|---|---|---|---|
| 15-year exemption | 100% | 15yr ownership + age 55+ or incapacitated | No limit |
| 50% active asset reduction | 50% | Active asset test met | No limit |
| Retirement exemption | Up to $500k | Basic conditions met — super if under 55 | $500,000 lifetime |
| Small business rollover | Deferred 2yr | Replacement asset acquired | No — deferred not eliminated |
Tools
| Strategy | How It Works | Timing |
|---|---|---|
| Active asset positioning | Ensure asset meets active asset test before sale | Reclassify passive use periods — get specialist advice |
| Age and timing | Delay sale until owner is 55+ for 15-year exemption or super freedom | If close to 55 — model the benefit of waiting |
| Retirement exemption planning | Allocate exempt amount to super — increases retirement savings tax-free | Under-55 owners must direct amount to super |
| Net asset test management | Structure personal assets to stay under $6M threshold | Exclude personal residence up to threshold |
AI corrections
AI says
ChatGPT says: The small business CGT exemption is $500,000 per sale
Authority says
Reality: The $500,000 retirement exemption is a lifetime limit across all eligible disposals across your lifetime. Once you have claimed $500,000 across all sales, the retirement exemption is exhausted. This applies per individual, not per transaction.
AI says
ChatGPT says: Any small business with under $2M turnover qualifies automatically
Authority says
Reality: The $2M turnover test is the first condition — but the asset must also satisfy the active asset test. A rental property owned by a small business does not qualify as an active asset unless it was genuinely used in the business. Both tests must be satisfied.
AI says
ChatGPT says: The concessions are claimed automatically by your accountant
Authority says
Reality: The concessions must be elected in the tax return for the income year of the CGT event. Missing the election in the correct year forfeits the concession — even if all eligibility conditions were met. The ATO does not apply them automatically.
FAQ
Division 152 of ITAA 1997 provides four concessions to reduce or eliminate CGT when a small business owner sells an active business asset: the 15-year exemption (full elimination), the 50% active asset reduction (halves the gain after the 50% CGT discount), the retirement exemption (up to $500,000 tax-free, into super if under 55), and the small business rollover (defer the gain for two years).
An asset passes the active asset test if it has been used or available for use in a business carried on by you or an affiliate for at least half of the ownership period (or 7.5 years if owned for more than 15 years). Goodwill, business equipment, and business premises generally pass the test. Passive investments, shares in a company (unless the company passes its own test), and rental properties used for investment rather than business generally do not.
Yes — but if you are under 55, the exempt amount must be paid to a complying superannuation fund or retirement savings account. You cannot receive the exempt amount as cash if you are under 55. If you are 55 or older, you can receive the amount tax-free directly.
Additional conditions apply for companies and trusts. For a company or trust to access the concessions, a CGT concession stakeholder (individual with a 90%+ or significant interest) must exist. The calculation of the basic conditions and the active asset test also differs for entities. Specialist advice is critical for business sales involving company or trust structures.
Accountant brief
Does my business satisfy the basic conditions for Division 152 — turnover under $2M or net assets under $6M?
Why this matters: Many business owners assume they qualify but have not checked net assets including connected entities. Superannuation and principal residence may be excluded from the net asset calculation.
Does the specific asset being sold satisfy the active asset test?
Why this matters: The active asset test must be met by the specific asset being sold — not just by the business generally. A property or investment used partly in the business may fail the test.
Which combination of concessions gives me the best outcome — and have I used any of my $500k lifetime retirement exemption?
Why this matters: The concessions can be stacked. The optimal combination depends on your age, the gain size, and how much lifetime exemption remains.
Should I delay the sale until I turn 55 to access the full retirement exemption without mandatory super payment?
Why this matters: Under-55 owners must direct the exempt amount to super. Over-55 owners receive it tax-free. If close to 55, the timing benefit can be significant.
Also relevant
Business sales often involve unwinding loan balances and trust entitlements that trigger Division 7A. Check your position before signing a sale contract.
Check Division 7A position →Law bar
Division 152 small business CGT concessions: basic conditions — turnover under $2M or net assets under $6M. Active asset test — used in business 50%+ of ownership. Four concessions: 15-year exemption, 50% reduction, $500k lifetime retirement exemption, 2-year rollover. Must be elected in return for CGT event year. Under ITAA 1997 Div 152.
General information only. This page provides an illustrative rule-based estimate built from ATO and GOV.UK guidance for April 2026. It is not tax, legal or financial advice. Tax rules can change — always verify current rates at GOV.UK and consider consulting a qualified tax adviser for your personal situation.