Small Business Entities and CGT Concessions
These applied questions are written from the supplied Small Business Entities reading map and current statutory framework. They will be supplemented by the live seminar question set when supplied.
Applied Questions
Question 1 — Aggregated turnover
A sole trader has turnover of $7.8 million. She owns 60% of a company with turnover of $3.4 million and controls its board. Explain whether looking only at the sole trader’s $7.8 million is sufficient for the general SBE test.
Question 2 — Different thresholds
Explain why a taxpayer with aggregated turnover of $8 million may qualify for some SBE concessions but not the small business CGT concessions through the turnover gateway.
Question 3 — Active asset
A company sells a warehouse that was used in its business for six years, then leased to an unrelated tenant for the final four years before sale. Identify the Division 152 active-asset issues and the further facts required.
Question 4 — Net asset gateway
A business owner has $1.8 million turnover but significant investment assets and connected entities. Explain why the $6 million maximum net asset value test may still matter.
Question 5 — Concession ordering
An individual sells a qualifying active asset after eight years and makes a $1 million capital gain. Explain the order in which the general CGT discount and available Division 152 concessions should be considered.
Question 6 — Restructure rollover
A sole trader wants to transfer the operating business and goodwill to a company wholly owned by the same individual. Identify the principal Subdivision 328-G issues and why commercial purpose/documentation matter.
MCQs
- Which concept can require turnover of other entities to be counted? A. Cost base B. Aggregated turnover C. Franking account D. Taxable value.
- Which Division contains the small business CGT concessions? A. 40 B. 70 C. 152 D. 207.
- Which is an alternative eligibility gateway relevant to the small business CGT concessions? A. $6m maximum net asset value test B. GST turnover C. FBT gross-up D. Div 293 income.