This is great news for people who are planning to fund their retirement by selling their business assets.

The Government has increased the lifetime limit small businesses who are eligible for capital gains tax exemptions from $500,000 to $1 million. This $1 million exemption is a per person, lifetime limit and is in effect now.

To qualify for the capital gains tax exemptions, the business must be valued at less than $5 million. The qualifying value will increase from $5 million to $6 million (or annual turnover less than $2 million) from 1 July.

In addition, after-tax contributions to super will be capped at $150,000 a year (or $450,000 averaged over three years) from 1 July. However, people who act before 1 July can contribute up to $1 million.

This means some business owners may be able to contribute up to $2 million before 1 July this year or $1.45 million next financial year.

Smart Investing
By Robin Bowerman
8 September 2006
Principal & Head of Retail, Vanguard Investments Australia