BUDGET 08/09: Small business capital gains tax concessions extended

By: Graham Gardiner


The Federal Government has announced that it will extend small business capital gains tax (CGT) concessions to partners in a

The Federal Government has announced that it will extend small business capital gains tax (CGT) concessions to partners in a partnership and entities owning CGT assets used by a related entity where the partnership or related entity passes the small business entity test.

BDO Kendalls explains that currently, entities with a turnover of less than $2 million are ‘small business entities’ and are automatically eligible for the small business CGT concessions.

However, in business structures where the CGT asset is owned by an entity but is used in a related entity which carries on a business, the owner of the asset is not covered by the small business entity test.

In relation to partnerships, it is the partnership and not the individual partner that must be a small business entity. The Government will extend access to the small business CGT concessions to entities owning a CGT asset used by a related entity in a business and partners owning a CGT asset used in the partnership.

So long as the related entity or partnership passes the small business entity test, the entity which owns the CGT asset will be eligible for the concessions.

Under this measure, an increased number of small businesses will be entitled to concessions on capital gains made from the 2007/08 income year onwards.

"The increased access to small business CGT concessions will be welcomed by small businesses. The proposed amendment closes an existing loophole in the law," BDO Kendalls says.

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