ATO valuation blocks small business CGT concession

Posted on 29 January 2012

A taxpayer has been unsuccessful before the Administrative
Appeals Tribunal in a case concerning a property sold in 2005 and a claim for
the small business capital gains tax (CGT) concessions. The Tribunal held the
taxpayer was not eligible for the concessions as it failed the (then) $5
million "maximum net asset value" test. The matter turned on the
valuations relied upon by the taxpayer and the Commissioner in valuing the
property. The Tribunal preferred the Commissioner's valuations despite having
concerns with various aspects, including assumptions made.

TIP:  Small businesses can access a range of tax concessions to reduce CGT on the sale of certain assets if certain conditions are met. One of the conditions is that the taxpayer must satisfy the "maximum net asset value" test. To pass the test, the net value of all the CGT assets of taxpayer (including affiliates and connected entities) must not exceed $6 million (previously $5 million).  The rules can be complex, so please contact our office for more information.