Small business CGT concessions, explained in plain English

There are four small business CGT concessions. The ATO describes their effect as allowing you to reduce, disregard or defer some or all of a capital gain from an active asset, where you meet the conditions.

Two things are worth knowing before the detail.

The first is that they survived the 2026 reforms, and one of them got more generous. The second is the part almost nobody writes about: whether you qualify was largely decided years ago, by how the business is owned and how long you have held it. By the time you are sitting at a settlement table, the answer is already set.

This explains what the four are, in the ATO's own words, and what determines whether they are available to you.

What are the small business CGT concessions?

The ATO describes their effect this way:

There are four, and these are the ATO's own summaries of each.

Small business 15-year exemption. "How to claim the small business 15-year exemption on a business asset to reduce or disregard CGT."

Small business 50% active asset reduction. "Reduce the capital gain on an active asset by 50% (in addition to the CGT discount if conditions are met)."

Small business retirement exemption. "How to claim the small business retirement exemption to reduce or disregard CGT on active assets."

Small business roll-over. "Defer all or part of a capital gain made from selling an active asset."

Source for all four: ATO, Small business CGT concessions.

They also stack. The ATO notes there is an order in which they apply, and the concessions can be used alongside the general CGT discount. Working out which ones you qualify for and in what order is your accountant's job, and it is worth having that conversation early rather than at contract stage.

Are small businesses losing the CGT concessions?

No. This is the question the reform coverage has left hanging, so here is the answer from the Prime Minister's office:

One of them was made more generous:

Source: Prime Minister's office, Tax reform implementation for small business and startups.

Read the second quote carefully, because it is easy to misread. The threshold rise applies to the 50% active asset reduction. The other three concessions keep their existing tests. our guide to the 2026 CGT reforms covers what else changes and when.

Who is eligible?

Before any of the four apply, you have to pass the basic conditions. The ATO puts the first test this way:

On that second route, the ATO states that to pass the test, the total net value of your CGT assets must not exceed $6 million. The asset itself must also pass the active asset test (ATO).

One more thing worth knowing, in the ATO's words: "All the concessions, except for the small business 50% active asset reduction, have additional requirements you must meet."

Underneath those headline tests sit definitions of affiliates, connected entities, and what counts as active. Those definitions are where eligibility is usually won or lost, and aggregating turnover across a family group or a related property entity catches people out. This is technical and it is not something to settle from an article. Take it to your accountant with your structure in front of you.

What is the 15-year rule?

The 15-year exemption is the one that produces a zero outcome, and it is also the one with the most time built into it. It requires continuous ownership of the asset for at least 15 years, with the relevant individual aged 55 or over and retiring or permanently incapacitated. The conditions are set out in full on the ATO's page for the concession, and the detail matters, so check yours against it with your accountant.

That combination has a consequence. You cannot acquire fifteen years of ownership in the year before a sale. You cannot restructure your way to it quickly, and restructuring can reset the clock. It is a concession you either walked into over a decade and a half, or you did not.

What is the 80% rule, and the 20% and 90% tests?

These get muddled online, and they are three different things.

The 80% test is part of the active asset test where the asset being sold is a share in a company or an interest in a trust. Broadly, at least 80% of the market value of that entity's assets must be active assets.

The 20% test decides who counts as a significant individual. The ATO puts it this way:

A CGT concession stakeholder is a significant individual, or the spouse of one where that spouse has a participation percentage above zero (ATO).

The 90% test applies only where an entity sits in between. In the ATO's words:

All three turn on your ownership structure rather than your trading performance. Who holds what, and through which entity, was decided when you set the business up or the last time you restructured. Take your actual structure to your accountant rather than working it out from percentages in an article.

The part nobody puts in the guide

Every page explaining these concessions treats them as something you apply at the end. Something your accountant handles once a price is agreed.

They are better understood as the tax result of decisions you already made. How long you have held the asset. Which entity owns what. Who holds twenty per cent. Whether the asset counts as active. Every one of those was set years before a buyer appeared, and most of them are slow or impossible to change once a sale is in motion.

Which is why the useful version of this conversation happens two or three years out. Accountants working in this area say the same thing: restructuring close to a sale can be ineffective or trigger its own tax problems, and the best outcomes are achieved years in advance (Future Accounting). An accountant with time available can tell you what would need to change and whether changing it is worth it. The same accountant looking at your structure mid-sale can mostly tell you what you have got.

There is a harder point underneath that one.

These concessions reduce the tax on a sale. They do nothing to bring about the sale. The best tax outcome available is worth nothing on a business that no buyer wants, and the most common reason an owner-led business does not sell is that too much of it is the owner. our guide to key person risk covers what buyers look for and what it costs when they find it.

So the order matters. Make the business sellable, then optimise the tax on the sale. Doing it the other way round produces an excellent tax plan for a transaction that never happens.

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