DEBTS RESULT IN CGT SMALL BUSINESS CONCESSIONS BEING DENIED

The Administrative Appeals Tribunal has confirmed that debts of $3.8m that a taxpayer was owed by related business and investment entities were ‘CGT assets’ of the taxpayer that had to be taken into account under the maximum net asset value test. As a result, the taxpayer exceeded the then $5m test threshold and therefore could not qualify for the small business CGT concessions in relation to the capital gain made on the sale of land and improvements from which he operated a car radio business.

TIP: If a taxpayer is a small business entity, the taxpayer does not need to satisfy the net asset value test (subject to other requirements being met).