Atticus conducts a farming business on land he purchased in 1990 and has owned continuously since then. The net value of his CGT assets for the purpose of the maximum net asset value test is less than $6 million.

Atticus is 66 years old and would like to retire. He decides to sell the major asset of the farming business, the land. Atticus sells the land and works out he has a capital gain of $100,000. 

Atticus satisfies all the conditions to apply the small business 15-year exemption in relation to the capital gain. This is because: 

• he has satisfied the maximum net asset value test
• the land has been used continuously in his business so it is an active asset, and 
• he is over 55 and retiring.

This means Atticus can completely disregard his capital gain of $100,000 using the 15 year exemption. 
 

Ken is a small business operator who sells an active asset that he has owned for more than 12 months. He is not eligible for the 15 year exemption.

He makes a capital gain of $20,000.

Ken also makes a capital loss of $4,000 in the same income year.

Assuming Ken satisfies all the conditions for the CGT discount and the small business 50% active asset reduction, he calculates his net capital gain as follows:

Capital gain

$20,000

Capital loss

$4,000

Take the loss away from the gain

$16,000

Apply 50% CGT discount ($16,000 × 50%)

$8,000

Apply 50% small business active asset reduction ($8,000 × 50%)

$4,000

Reduced capital gain

$4,000

In this example, Ken was eligible for both the CGT discount and the small business 50% active asset reduction. He reduced his capital gain by 75% by:

• using the CGT discount to reduce his CGT by 50%, and
• reducing the remaining capital gain by another 50% by using the small business 50% active asset reduction.

If he satisfies the required conditions, Ken may be able to further reduce his $4,000 capital gain by using either the small business retirement exemption or small business rollover, or potentially both of these concessions.