Selling a business
Small Business CGT Concessions
When you sell a business, the tax on the gain can be reduced, deferred or removed entirely. From 1 July 2027 the rules around it change. Here is what applies, what changes, and where the finance side of the sale comes in.
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The quick answer, up front
When you sell a business, the small business CGT concessions can cut the tax on your capital gain, defer it, or remove it. There are 4: the 15 year exemption, the 50% active asset reduction, the retirement exemption with a $500,000 lifetime limit, and the rollover. You have to meet the ATO's basic eligibility conditions before any of them apply, and they can be combined.
The date to know is 1 July 2027. From then the flat 50% CGT discount is replaced by an inflation based approach with a 30% minimum tax on real gains, but gains built up before that date keep the 50% discount, and the 4 small business concessions stay (business.gov.au, Capital gains tax for business, checked 27 October 2026; Treasury small business explainer, 18 June 2026).
The 4 concessions in plain terms
What each one does
| 15 year exemption | No CGT on an active asset you have owned for at least 15 continuous years, if you are 55 or older and the sale is connected with your retirement, or you are permanently incapacitated. |
| 50% active asset reduction | Halves the capital gain on active business assets owned for 12 months or more. |
| Retirement exemption | Disregards gains up to a $500,000 lifetime limit per individual. Under 55, the exempt amount must go into super or a retirement savings account. |
| Rollover | Defers the gain for 2 years, or longer if you buy a replacement asset or improve an existing one. |
Sources: business.gov.au, Capital gains tax for business, and the ATO's pages on the 15 year exemption and the retirement exemption (last updated 6 June 2023), all checked 27 October 2026. The basic eligibility conditions, including the turnover and net asset tests, are set out by the ATO, and your accountant applies them to your structure.
What changes on 1 July 2027
Three things matter to someone selling a business. First, the flat 50% CGT discount is replaced for individuals, trusts and partnerships by an inflation based approach with a 30% minimum tax on real gains. Second, the change is prospective: gains that built up before 1 July 2027 keep the old 50% discount. Third, the small business concessions survive, and the turnover threshold for the 50% active asset reduction rises from $2 million to $10 million from 1 July 2027 (Treasury, Capital Gains Tax and Discretionary Trusts Reform: Small business explainer, 18 June 2026).
The practical point is that 1 July 2027 is not a cliff for a business you have owned for years. It is a reason to get a current valuation, so the gain built up to that date is documented, and to plan the sale on the after tax number rather than the headline price. Our business valuation calculator gives you a first read of that headline number in a few minutes.
Where the finance side comes in
The concessions are your tax position, not the buyer's. But they shape the deal. A seller who knows the after tax outcome can decide whether to leave part of the price in the business as vendor finance, which often decides whether a buyer can fund the purchase at all. Lenders fund business purchases against a deposit of 20% to 50% of the price as a guide, and on a sale heavy with goodwill the gap between a bank's appetite and the asking price is common. How that gap gets closed is covered in our guide to vendor finance when buying a business, and the full sale process is in our guide to selling a business in WA.
What to do now
- Get 3 years of clean financial statements and a current indicative valuation.
- Ask your accountant which concessions you qualify for today, and how 1 July 2027 changes that for your structure.
- Decide whether you would carry vendor finance, and on what terms, before a buyer asks.
- Talk to us about what a buyer is likely to be able to borrow at your price, so the price is one a buyer can fund.
This page is general information about tax rules, not tax advice. Rockwall Finance is a finance brokerage, not a tax adviser. Confirm your position with a registered tax agent before you sell.
Frequently asked questions
What are the small business CGT concessions?
There are 4. The 15 year exemption removes the gain on an active asset owned for at least 15 continuous years if you are 55 or older and retiring, or permanently incapacitated. The 50% active asset reduction halves the gain on active business assets owned for 12 months or more. The retirement exemption disregards gains up to a $500,000 lifetime limit. The rollover defers a gain for 2 years, or longer if you buy a replacement asset. All 4 require you to meet the ATO basic eligibility conditions first.
What changes to CGT on 1 July 2027?
From 1 July 2027 the flat 50% CGT discount is replaced by an inflation based approach with a 30% minimum tax on real gains, according to business.gov.au and the Treasury small business explainer of 18 June 2026. The change is prospective: gains built up before 1 July 2027 keep the old 50% discount. The 4 small business CGT concessions stay, and the turnover threshold for the 50% active asset reduction rises from $2 million to $10 million from the same date.
Should I sell my business before 1 July 2027?
Not automatically. Gains that accrued before 1 July 2027 keep the 50% discount whenever you sell, so the deadline does not force a rushed sale. What it does change is the arithmetic on growth after that date, and for some owners the higher $10 million threshold for the active asset reduction makes them newly eligible. The right answer depends on your structure, your age, how long you have owned the assets and your retirement plans, which is a question for your accountant with real numbers.
How does the retirement exemption work if I am under 55?
You can still use it, but the exempt amount must be paid into a complying superannuation fund or a retirement savings account. The lifetime limit is $500,000 per individual. If you are 55 or older there is no requirement to contribute the amount to super.
Do the CGT concessions affect how a buyer finances the purchase?
Not directly, because they are the seller's tax position. Indirectly they often do. Sellers who know their after tax outcome negotiate more confidently on price and on terms such as vendor finance, and a deal with some vendor finance in it can widen the pool of buyers who can fund the purchase. That is where the tax plan and the finance plan meet, and why both are worth settling before the business goes to market.
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Prefer to talk? Call Rowan on 0483 292 005 or Ari on 0434 929 370.