Why these claims matter
The four small business CGT concessions — the 15-year exemption, the 50% active asset reduction, the retirement exemption and the rollover relief — reduce CGT materially when the conditions are met. They are also among the most reviewed claims in Australian tax. The reviews focus on whether the eligibility conditions were genuinely satisfied, and where market value tests are involved (the $6m net asset value test, the active asset test) the documented value matters.
The $6m net asset value test
A taxpayer satisfies the maximum net asset value test if the net value of CGT assets owned by the taxpayer and their connected entities is $6m or less just before the CGT event. The value is market value, not book value. Where the position is close to $6m, the documentation behind the value matters. A casual assessment that says "the business is worth about $5m so we are eligible" does not survive review. A defensible market valuation, with methodology and evidence documented, does.
The active asset test
The asset must be used in the course of carrying on a business — and for the relevant period. The valuation analysis can support this where the question is whether the asset is being valued as active or passive. Methodology-relevant questions include: how the asset is being used; whether goodwill is being captured in the value; whether passive assets (e.g., investment portfolios held within the business entity) are being excluded. The Valuation Position Analysis section addresses these questions explicitly where the active asset test is in question.
What a defensible position looks like
A defensible small business CGT concession valuation has: clear identification of the asset being valued and the entities involved; methodology selected and justified for the specific test (NAV-led for the $6m test; earnings-led for the active asset value); evidence documented for each input; conservative assumptions where evidence is thin; explicit treatment of any items at the boundary (passive assets, related-party balances, marginal eligibility); independence statement and senior signatory; complete working file retained.
What we typically recommend
Small business CGT concession matters generally warrant the Defensible Valuation File tier (from $8,995 + GST) due to review risk. Where eligibility is marginal — value close to the $6m threshold, active asset test contested, multiple entities or interests involved — the Valuation Range & Scenario Review engagement is the right level. The structured range analysis identifies the supportable position with full reasoning, which is what the adviser needs to support the claim with confidence.
What we will not do
We will not adopt a value to engineer eligibility. Where the evidence supports a value below the $6m threshold, we report it; where it supports a value above, we report it. Where the active asset test is genuinely marginal, we say so. The defensible position is the one the methodology and evidence support — not the one that produces the eligibility outcome the client prefers. This discipline is the entire point of independent valuation in concession matters.