Capital gains tax is one of the most complicated tax topics and many times, business owners get confused. However, there are various things that need to consider about capital gains tax (CGT) when you are looking to sell your organisation. Professional tax accountants for small businesses can help business owners understand the whole matter. Thus, it is important for you to take help from experienced accountants. To know more about capital gains tax, keep reading this blog.

What is Capital Gains Tax?

Generally, CGT is the tax that you pay on gains or profits from selling assets, such as property. You make a capital gain when the difference between the price of buying your property and what you gained by selling it is greater than zero. In simple words, you made a profit. On the other hand, if you got less than the price or cost base of your assets, it means you made a capital loss.

We understand it is quite difficult to understand, but you can hire small business accounting services to keep track of capital gains tax. You record your capital losses and gains in your income tax return, and in most cases, you have to pay tax on capital gains. Interestingly, it is known as ‘capital gains tax’ which is a part of your income tax.

How Does Capital Gains Tax Work?

Usually, no one wants to pay capital gains tax or CGT. Capital gains tax was introduced in 1985 in Australia, and CGT applies to any asset you have gained after that time unless exempted specifically. The more capital profit you have made, either through a long-term holding or a good investment, the more tax is applied if you sell your asset. It is not referred to as a separate tax, in fact, it is considered a part of your income tax. Tax accountants for small companies know everything about CGT, so you can also take help from them.

4 Small Business CGT Concessions

All the concessions have some requirements that you have to meet except for small business 50% active asset reduction.

  • Small Business 15-Year Exemption
    You are not required to pay capital gains tax when you sell an active asset if you meet the following requirements:
  1. Your age is 55 years or above and retiring, or are incapacitated permanently
  2. You have owned the asset for at least 15 years continuously

You may contribute amounts from the small business 15-year exemption to your super fund without impacting your non-concessional contributions limits. For more details, you can also seek help from a small business accountant in Melbourne.

  • Small Business 50% Active Asset Reduction
    When you sell an active asset, you will require paying tax on 50% of the capital gain. This concession applies if you meet the primary eligibility criteria. It applies along with the CGT discount.
  • Small Business Retirement Exemption
    Capital gains from the sold active assets are exempt from the capital gains tax up to a lifetime limit of $500,000. If your age is under 55, then you have to pay the exempt amount into a retirement savings account or a superannuation fund. On the other hand, if your age is above 55 years when you dispose of your business, you access concessions immediately.
  • Small Business Rollover
    You can set aside the capital gain for up to 2 years until you purchase the replacement asset or enhance the current active asset. Primarily, the deferred capital gain is used to minimise the cost base of the replacement asset.

To keep track of any type of tax, you need to have accurate records of financial transactions. If you don’t have time to record and maintain the financial records of your business, you can seek help from a Melbourne bookkeeper.


As a business owner, you must know about every tax that you have to pay to avoid any kind of penalty or fine. You can keep track of all business taxes if you have a reliable and experienced accountant in your company. By hiring a tax accountant, you can be sure that every tax will be paid on time. For more information regarding CGT, you can contact Accountants in Melbourne.