Answered Essay: Mary is 66 years old and has operated a small business since 1992. She retired from business and the net value of her assets is $1.5m. In selling his business on 3 March 2015 he sold one active asset (A) that was purchased in July 1988 and made a capital gain of $50,000 from the disposal of that asset. Another active asset (B) that was purchased in October 2005 was sold and a capital gain of $60,000 was made on its disposal. Mary also sold a rental property that he purchased in 2001 and made a capital gain of $70,000 on its disposal. Given that Mary made these disposals in the current year and that she has no capital losses or other capital gains, what is his net capital gain in the current year, assuming that she wishes to take advantage of the small business concessions including the retirement exemption ($500,000 balance available) and minimise her assessable income?

Mary is 66 years old and has operated a small business since 1992. She retired from business and the net value of her assets is $1.5m. In selling his business on 3 March 2015 he sold one active asset (A) that was purchased in July 1988 and made a capital gain of $50,000 from the disposal of that asset. Another active asset (B) that was purchased in October 2005 was sold and a capital gain of $60,000 was made on its disposal. Mary also sold a rental property that he purchased in 2001 and made a capital gain of $70,000 on its disposal. Given that Mary made these disposals in the current year and that she has no capital losses or other capital gains, what is his net capital gain in the current year, assuming that she wishes to take advantage of the small business concessions including the retirement exemption ($500,000 balance available) and minimise her assessable income?

Expert Answer

 

Capital Gains can be avoided if the assessee satisfies the basic conditions for the small business CGT concessions.

Assessee has to make a personal contribution equal to the exempt amount to a complying super fund or retirement savings account (RSA)

Since , Mary has $500,000 balance as per retirement exemption .

Her total Capital Gains are computed at $ 180,000 ( 50K+60K+70K)

This total amount can be avoided.

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