If you're running a small business in Australia, capital gains tax (CGT) hits more often than you think. Sold a delivery van? CGT event. Wound up a piece of equipment that was on the books for ten years? CGT event. Sold goodwill when you exited the business? Big CGT event. Each of these creates a tax liability you need to declare, and the rules for working out the gain — the cost base, the discount eligibility, the small-business concessions — are notoriously messy.
This guide covers what you actually need to know, in priority order. We've deliberately stuck to the cases real small businesses hit. If you're a property developer or an investment fund the rules go deeper; for everyone else, this is the 95th-percentile playbook.
A CGT event happens when you dispose of a CGT asset. Disposal isn't just "sold for cash" — it covers:
Sale (the obvious one)
Loss or destruction — an insurance write-off counts
Gift — you're still on the hook for CGT on the market value
Transfer to private use — taking a business car home permanently
Compulsory acquisition — a government takes your land
Your capital gain or loss is simple in theory:
Capital proceeds − Cost base = Capital gain (or loss)
The result for the year either adds to your taxable income (if a net gain) or carries forward to offset future gains (if a net loss). Crucially, — never ordinary income — so the year you sell a major business asset matters a lot.
The ATO splits the cost base into five "elements" and you can add legitimate spending under each one:
Element
What it covers
1st
What you paid to acquire the asset
2nd
Incidental costs of acquisition AND disposal — stamp duty, legal fees, agent commissions, valuation costs
3rd
Holding costs — rates, interest, insurance, repairs (only for assets used to produce non-assessable income; rare for trading businesses)
4th
Capital expenditure that improved the asset — renovations on an investment property, an engine rebuild on a vehicle
5th
Capital expenditure to preserve or defend ownership — legal fees disputing a boundary, easement costs
You can't double-dip. If you've already claimed a deduction for a holding cost (e.g. interest on a business loan), you can't add it to the 3rd element. This is the single most common audit trigger we see in client books — accountants quietly stripping out duplicated deductions years after the fact.
OneBookPlus tracks all five elements automatically. Every time you record a renovation, improvement, or capital addition on an asset, we tag it with the right element and roll it into the cost base when the asset is eventually disposed of. Your accountant gets a clean cost-base trail without scrolling through twelve invoices.
Individuals, trusts, and complying superannuation funds get a 50% discount on capital gains when:
The asset was held for more than 12 months before disposal, AND
The asset was acquired after 21 September 1999, AND
You apply any capital losses before the discount (you can't discount the loss into oblivion)
Companies do NOT get the 50% discount. This is the single biggest reason "should I incorporate?" comes up for owner-operated businesses with appreciating assets. Restructuring after the asset has appreciated is its own CGT event, so the discount question has to be answered before the asset is on the books, not after.
OneBookPlus shows the 50% discount eligibility on every disposal screen the moment you record proceeds — with a banner reminding you that incorporated entities don't qualify. Your accountant still signs off; we're flagging eligibility, not determining it.
If your aggregated turnover is under $2 million, OR you have net business assets under $6 million (the "Small Business" test), four concessions are available and they stack:
If you're 55+ and retiring or permanently incapacitated, AND you've held the asset for at least 15 years AND used it actively in business that whole time — the entire gain is exempt. Zero CGT. This is the single biggest benefit in the Australian tax system for owner-operators.
After the standard 50% discount, you reduce the remaining gain by another 50%. So a $200k gain held >12 months goes to $100k (standard discount), then $50k (active asset). Stacks with the discount — they're not mutually exclusive.
You can disregard up to $500k of capital gain in your lifetime. Under 55, the exempt amount has to go into a complying superannuation fund; 55+, you can take it as cash.
Defer the gain by reinvesting in a replacement business asset within two years. The cost base of the replacement asset is reduced by the deferred gain — pay later, not now.
You can apply these in any order, but the order changes the maths. A common path is: 50% standard discount → 50% active asset reduction → retirement exemption → rollover. We don't make the choice for you; we surface the gain and link to your tax agent who picks the path.
For most small businesses we see, CGT events come from one of five places:
Selling business equipment. A trade van, a piece of machinery, a fit-out. The written-down value (cost − accumulated depreciation) is the cost base; sale proceeds drive the gain or loss.
Disposing of an investment property held by the business or a related entity.
Selling business goodwill at exit. Often the biggest CGT event of an owner's career.
Vesting of shares or units issued under an employee incentive plan.
Insurance recoveries on assets that were destroyed. The recovery is the capital proceed; the cost base is the written-down value.
OneBookPlus catches three of these automatically. When you record a disposal on your asset register, the system computes the CGT cost base from your purchase + capital improvements, applies the 50% discount if the hold period clears 12 months, and produces a CGT summary your accountant can sign off on. We don't guess about the small business concessions — that's your tax agent's call, and the inputs they need (proceeds, cost base, hold period, business-use %) are all there in one screen.
For goodwill and share vesting events, you'll still want a tax agent walking you through the maths. But the underlying records — purchase cost, the date you started using the asset, every improvement spend along the way — are the inputs that take ten hours of paperwork to reconstruct at year-end if they're not captured as you go.
For small business entities with aggregated turnover under $10 million, the $20,000 instant asset write-off applies through 30 June 2026. This is a depreciation incentive, not a CGT one — but assets you write off instantly still create a CGT event on disposal. The "depreciated to zero" book value doesn't mean the cost base is zero. You're still allowed to claim the original cost as the cost base for CGT purposes when the asset is sold. Don't leave this on the table.
Continued from the 2019 legislation and confirmed in the 2025–26 budget cycle — foreign residents cannot access the main residence CGT exemption. If you have business owners or shareholders who are non-residents, factor this into any disposal timing.
While not strictly CGT, the proposed Division 296 tax on super balances above $3 million has implications for retirement-exemption planning under the small-business CGT concessions. It's still being legislated as of mid-2026 — your tax agent will track the progress, but if you're relying on the retirement exemption to dump $500k of gain into super, factor in the possibility of Division 296 applying at the SMSF level.
Any deemed dividend treatment can sometimes interact with CGT events on asset rollovers. This is niche but if you're running a Pty Ltd with shareholder loans, your accountant should be reviewing both at the same time.
We'll keep this guide current as further rules change. For now, the focus areas above are stable and proven.
We don't replace your tax agent — CGT is the moment you most need professional advice and we've built the product to make their job ten times faster, not to put them out of work. Here's what the platform does:
Captures the cost base as you go. Every purchase, every improvement, every capital addition links to the relevant asset. You don't reconstruct it at year-end.
Tracks business-use %. Asset usage that changes (a vehicle that's 80% business now, 60% next year) is captured per asset so disposals can apply the right proportion.
Computes gain or loss on disposal. The moment you record a sale, the cost base + proceeds + holding period are surfaced with the 50%-discount hint if you're eligible.
Exports a CGT pack. When your tax agent needs to lodge, the entire disposal history (date / cost / improvements / proceeds / gain / discount eligibility) comes out as a single export.
Keeps the books in sync. Every disposal flows through to your balance sheet automatically — you'll never see the asset still sitting on the books months after it's been sold.
If you're using OneBookPlus today and you want CGT-ready books:
Add every depreciable asset to your Fixed Assets register — cars, equipment, IT hardware, furniture. Don't worry about getting the depreciation method perfect today; what matters is the asset is in the system with its purchase date and cost.
Any time you make a capital improvement (renovation, engine rebuild, fit-out), record it as a cost-base addition on the asset. Tag it as a 2nd-element (incidental acquisition cost), 4th-element (improvement), or 5th-element (defence) cost.
When you dispose of an asset, click "Record disposal" on the asset detail page. Enter the proceeds and disposal date. We'll compute the gain or loss + flag the 50% discount eligibility.
At year-end, your accountant pulls the CGT pack and lodges. They make the small-business-concession choice; we've done the maths.
Five minutes of bookkeeping discipline per asset saves you about an hour of accountant time per asset at year-end. Multiply by the asset count and the maths is obvious.
If you're facing a single large CGT event (a goodwill sale, a property disposal, a business exit), engage a CGT-specialist accountant six months out, not the week before lodgement. The small-business concessions are powerful but timing-dependent — the wrong order of operations can cost you tens of thousands of dollars.
For ongoing CGT tracking on your business assets, OneBookPlus does the bookkeeping; your tax agent does the lodgement. The handoff between us is built into the product.
Ready to set up CGT-ready books?Try OneBookPlus free — set up your Fixed Assets register in under ten minutes and we'll handle the rest as you go.