Selling business assets SME proprietors do not need to sell their business to get the benefit of generous small business CGT concessions. You may be eligible for these concessions if you sell an 'active asse' of the business. Note that active assets are not limited to goodwill. They can even include real estate, patents and other capital assets. For example, if you run your business from a factory which you own and you satisfy the basic conditions under the small business CGT rules (namely the net value of your business assets does not exceed $5 million) you may be entitled to the small business CGT concessions because the factory is an active asset of your business. The main requirement is that the factory must have been used in your business for at least half the time since the date you purchased the factory. Most real estate used in a business qualifies as an active asset unless it is mainly used to derive rental income. The CGT concessions are very attractive for active assets used in carrying on a business. Say if your factory was worth $800,000 and you bought it for $400,000, the capital gain on the sale would be as follows: Profit on the sale of the factory $400,000 Less 50% CGT discount ($200,000) 50% active asset exemption ($100,000) Net capital gain $100,000 As you can see the CGT small business concessions are very generous and you don’t have to sell your business to qualify. You only need to sell a business asset.
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