Capital Gains Rollovers

There are circumstances in which taxable capital gains can be deferred or attached to other assets, which is described as a ‘rollover’.

This results in CGT not being immediately payable. Under a CGT rollover relief scenario, the capital gains consequences are not dealt with until the replacement asset is disposed of, or some other CGT event occurs.

When available, rollover relief in some instances allows the pre-CGT status to be preserved, or otherwise to keep the cost base and CGT status of a transferred asset.

Categories of rollover relief include asset swaps, or when the formal ownership of a CGT asset is changed, but the underlying ownership hasn’t changed.

CGT Rollovers generally

Rollovers are available under various conditions:

  • marriage or relationship breakdown
  • loss, destruction or compulsory acquisition
  • mining leases
  • scrip for scrip rollovers
  • demergers
  • other replacement-asset rollovers
  • other same-asset rollovers

Small Business* Capital Gains Concessions

Small Businesses have access to the following concessions and rollovers:

  • The small business 15‑year exemption provides a total exemption for a capital gain on a CGT asset if you have continuously owned the asset for at least 15 years, you are at least 55 years old or older and retiring or permanently incapacitated.
  • The small business 50% active asset reduction provides a 50% reduction of a capital gain.
  • The small business retirement exemption provides an exemption for capital gains up to a lifetime limit of $500,000. If under 55 years of age, the amount must be paid into a complying superannuation fund.
  • The small business rollover allows a deferral of all or part of a capital gain on a business “active” asset if a replacement asset or capital improvement is acquired within 2 years. The capital gain is deferred for up to 2 years until disposal of the replacement or improved asset or upon specific changes of use, such as a transfer to trading stock.
  • from 1 July 2016 Small business owners are to be able to change the legal structure of their business without incurring a CGT liability.  Details of the amending legislation are here, and see further information links below.

*What’s a “Small Business?”

A small business is basically a business

  • with an aggregated turnover of less than $2 million
  • the taxpayer and associated entities must generally have net CGT assets of less than $6 million and
  • meet a stakeholder participation test.

Further information

 

 

 

This page was last modified on 23 Aug 2017