If you apply the 50% active asset reduction, it reduces your capital gain by 50%. This is in addition to the 50% CGT discount method available to individuals and trusts who have owned a CGT asset for more than 12 months.
Unlike the other small business concessions, the small business 50% active asset reduction applies automatically if the basic eligibility conditions are satisfied, unless you choose to not apply it.
After applying the small business 50% active asset reduction, you may also be able to apply the small business retirement exemption or the small business rollover (or both) to the remaining capital gain.
You can choose not to apply the 50% active asset reduction. You might prefer to choose the small business retirement exemption or the small business rollover alone, if one of these gives you better results for your circumstances. For example, a company or trust may make larger tax-free payments under the small business retirement exemption.
