A taxpayer must satisfy either one of the CGT Small Business Entity (‘SBE’) tests:
- less than $2 million aggregated turnover;
- or the maximum net asset value does not exceed $6 million.
Under S.152-15 of the Income Tax Assessment Act 1996, a taxpayer satisfies the net asset test if, just before the CGT event, the sum of the following amounts does not exceed $6 million:
(a) The net value of the taxpayer’s CGT assets.
(b) The net value of the CGT assets of any entities connected with the taxpayer.
(c) The net value of the CGT assets of any affiliates of the taxpayer or entities connected with the taxpayer’s affiliates (excluding any assets already counted under category (b) above).
The ‘net value’ of an entity’s assets is determined under S.152-20 as:
The sum of the market value of its CGT assets
Less the liabilities of the entity related to those assets
Less provisions made for annual or long service leave, unearned income or tax liabilities
The net value of an entity’s net assets can be positive, negative or nil. It can be negative where its provisions and liabilities exceed the value of its assets.
McNamara & Company - Chartered Accountants, located minutes from the Melbourne CBD
www.mcnamaraandco.au/contact-us
Phone +61 3 9428 1062
Email admin@mcnamaraandco.au
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