Want to defer capital gains tax for up to 2 years?
Deferring capital gains tax on small businesses for two years.
Division 152 of the ITAA1997 allows certain small business further capital gains tax concessions, provided certain requirements are met. The requirements are quite complex so if any of these situations apply, or you think may apply, contact BNT Legal to discuss your situation further as it may be a beneficial call saving you thousands in tax.
Under Division 152 of the ITAA1997, if certain conditions are met, a taxpayer is able to choose rollover relief in respect of all, or part, of a capital gain arising from the sale of an active asset.
The effect of this is the taxpayer is able to defer paying capital gains tax (or part thereof) to which the rollover applies for a minimum of two years. Once the basic conditions are met, there are no other special requirements to enable the taxpayer to obtain this relief. This means that the taxpayer does not have to acquire a replacement asset or incur expenditure on an existing asset (and doesn’t even need an intention to do so).
If the taxpayer does not incur the expenditure on acquiring the new asset or improving the existing assets, CGT Event J5 will be triggered 2 years after the income year in which the earlier gain occurred.
However a capital gain arising under CGT Event J5 can be reduced under the small business concessions retirement exemption (sometimes without having to satisfy the qualification conditions again).
For more tax planning tips and ideas, further information on small business concessions and all taxation legal requirements and opinions contact BNT Legal.