A 2025 SMSF Guide for Accountants Using Small Business CGT Concessions

Small business clients continue to benefit from powerful CGT concessions that allow them to contribute the proceeds from the sale of business assets into superannuation.

Often with substantial tax relief.

Since 2021, several superannuation changes have enhanced how these exemptions work in practice, especially for older business owners using SMSFs.

This guide outlines how to practically apply the 15-Year Exemption and Retirement Exemption within SMSFs under the current 2025 superannuation and contribution framework.

Key Legislative Updates Impacting Strategy

1. Work Test Abolition (from 1 July 2022):

Business owners aged 67–74 can now make voluntary super contributions without satisfying the work test. This reform directly impacts timing strategies for SMSF contributions linked to CGT exemptions.

2. Bring-Forward Rule Expansion:

From 1 July 2022, individuals under 75 (previously 67) can trigger the bring-forward rule. This allows them to contribute up to $360,000 in non-concessional contributions over a three-year period.

2. Bring-Forward Rule Expansion:

From 1 July 2022, individuals under 75 (previously 67) can trigger the bring-forward rule. This allows them to contribute up to $360,000 in non-concessional contributions over a three-year period.

3. 2024–25 Contribution Caps and TSB Limits:

• Concessional: $30,000
• Non-Concessional: $120,000 (or $360,000 under bring-forward)
• Total Superannuation Balance (TSB) Threshold: $1.9 million

Advisers must assess TSB at 30 June prior to contribution.

Applying the Two Core CGT Exemptions

1. 15-Year Exemption (Section 152-B ITAA 1997)

• Lifetime cap: $1,515,000
• Eligibility:
  • Continuous ownership for 15+ years
  • Age 55+ and retiring, or permanently incapacitated
  • Satisfies either the turnover test (< $2M) or net asset test (< $6M)
• SMSF Opportunity: Contribute up to the full proceeds (not just the gain) without impacting non-concessional limits

Example:

Sally, aged 68, sells her business for $1.4M (after 18 years’ ownership). Under the 15-year exemption, she can contribute the full $1.4M to her SMSF without being limited by the work test or age cap.

2. Retirement Exemption (Lifetime cap: $500,000)

• For clients under 55 at time of CGT event
• Doesn’t require retirement
• Proceeds up to $500,000 can be contributed to super or retained outside super
• Still requires satisfaction of the turnover/net asset and active asset tests

Timing Contributions Strategically

Advisers should track and advise on:

• Lodgement deadlines
• Capital proceeds receipt date
• Interactions with TSB thresholds
• Age-related contribution options

Contributions must be made by the later of:

• Tax return due date for the year the CGT event occurs, or
• 30 days after receiving capital proceeds

Tip: With the work test removed and contribution caps indexed, there’s a strong case for front-loading contributions. Especially if future legislative tightening is expected.

Practical Case:

Robert, aged 69, sells his manufacturing business (owned for 20 years) for $2.5M.

• Capital gain: $1.7M
• Applies 15-year exemption: Up to $1.515M
• Makes full contribution to his SMSF
• With a TSB < $1.9M, he also triggers bring-forward to contribute an additional $360,000

This combination enables advisers to help clients contribute over $1.8M in a single planning window, without breaching caps.

Compliance Considerations for Advisers

• Contribution Classification
  Ensure your SMSF admin provider correctly categorises CGT-exempt contributions under section 292-100(7) for the 15-year exemption or section 292-100(9) for the retirement exemption.
• Supporting Documentation
  Retain:
  • CGT election forms
  • Sale contract
  • Proof of business activity for active asset test
  • Contribution notices and SMSF resolutions
• Fund Capability
  Confirm that the SMSF’s trust deed and admin system can accept and record the contribution type and source correctly. You can view our SMSF administration inclusions here.

Strategic Opportunities in 2025

• Bring-forward + CGT stacking: Allows near-$2M inflows for clients under the TSB cap
• Older client engagement: Work test removal gives new relevance to 67–74-year-old business owners
• Pre-retirement planning: CGT exemption use is no longer restricted to retirees under 67

Explore additional planning considerations in our related technical articles:

• Liquidity & Pension Strategy for Property-Heavy SMSFs
• Avoid Audit Delays: What to Organise in Advance
• Claiming Depreciation on SMSF Rental Properties

Supporting You with SMSF Contributions & CGT Compliance

At SMSF Engine, we assist accountants and advisers with:

• Accurate CGT contribution handling
• Timely administration to meet lodgement deadlines
• Full categorisation under concessional, non-concessional, or CGT-exempt rules

Review our transparent pricing or speak to our admin specialists to simplify the process for your client base.

Need Help Navigating a Client CGT Event?

Whether you’re planning a contribution strategy or need confidence in categorisation and compliance, our SMSF administration team is ready to support you.

Contact us today for expert guidance on managing CGT-exempt contributions inside your clients’ SMSFs.