If you own an asset—such as land, a factory, or a trademark—that is used by someone else in operating a small business, you may be eligible for capital gains tax (CGT) small business concessions when you sell the asset. These concessions can reduce, eliminate, or defer the capital gain arising from the sale.
For example, if you own a commercial property—either solely or jointly with your spouse—that is used by your spouse in their business, such as an art framing, photography, or accounting business, you may qualify for these concessions.
Similarly, these concessions may apply if you own an asset that is used in a business operated by a family company or family trust in which you have a relevant interest. However, the eligibility criteria can become more complex if you are only a beneficiary of a family trust.
Notably, these rules can also apply in reverse—meaning that if a family company or family trust owns an asset that is used in a business run by a relevant shareholder or beneficiary, the CGT small business concessions may still be available (for example, in the case of farmland).
It is important to note that these rules apply regardless of whether you lease the asset to the business operator. Additionally, where a testamentary trust continues to operate a business previously run by the deceased, the concessions may still apply under certain conditions. In such cases, selling the relevant business asset within two years of the deceased’s passing may offer a simpler way to access these benefits.
For these concessions to apply, the asset owner and the business operator (or entity) must be considered "affiliates" or "connected entities" as defined under tax law. Determining whether this relationship exists can be complex and depends on the specific circumstances of the parties involved.
If you believe you may be in this situation—or if you are planning to start a small business that will use assets owned by someone else—we
strongly recommend seeking professional advice. Consulting with us in advance can help ensure you achieve the most
tax-effective CGT outcome.
