What is the CGT Cap Amount?
The CGT cap amount has a lifetime limit of $1,935,000 for 2026/27 and is indexed in $5,000 increments based on AWOTE (an ABS measure). It’s not automatically increased. The small business retirement cap is part of the CGT cap and has a lifetime limit of $500,000, which is not indexed. If you only use the retirement exemption, your CGT cap is limited, by default, to $500,000. Track contributions to ensure you don’t exceed the CGT cap. Contact the Australian Taxation Office (ATO) to find out what has already been reported.
The sale of small business assets can substantially increase a member’s super balance by combining SBCGT concessions with NCC and concessional contribution caps.
Example – Small business 15-year exemption
Ken is aged 61 and owned an active asset continuously for 18 years which he sold on 10 January 2027. He received $1,000,000. The capital gain was $200,000. Ken met all of the conditions for the 15-year exemption under the SBCGT concessions. The capital gain is disregarded. He contributed 100% of the capital proceeds of $1,000,000 to his SMSF on 31st March 2027. He provided his SMSF trustee with an executed CGT cap election on the approved form on the 30th March 2027.
Ken has not used any of his CGT cap in the past and thus the $1,000,000 will not be counted towards his non-concessional cap in the 2026/27 year.
CGT cap amount $1,935,000
Less proceeds from sale ($1,000,000)
CGT cap remaining $935,000
Ken also wants to contribute non-concessional contributions of $390,000 before 30 June 2027. He is eligible to use the bring forward rule (up to 3 years) as his total super balance was less than $1.84million as at 30 June 2026 and he has not triggered the bring forward rule in the last 2 years. If Ken’s balance was between $1.84million and $1.97million he can only bring forward 2 years. Balances $1.97million or over are not eligible to use the bring forward rule.
Ken can contribute $1,390,000 in non-concessional contributions (NCC) in the 2026/27 year, increasing his super balance to approximately $3,000,000 by June 30, 2027. This maximises his super balance, but he cannot make further NCC after his super balance exceeds $2.1 million at the end of the financial year. Ken’s employer can continue to make concessional contributions to his SMSF or Ken can make a member concessional contributions up to $32,500 for the 2026/27 year. After he turns 67 he must pass the work test or claim a work test exemption to personally claim a tax deduction for member contributions. To pass the work test, he must be gainfully employed for at least 40 hours during a consecutive 30-day period. He cannot claim a personal tax deduction after he turns 75 (unless it is made within 28 days in the following month).
Timing of making the Election
An SMSF can accept the election provided they have the SMSF member’s tax file number, and the election is made on the approved form.
The member must complete the CGT cap election form (NAT 71161) and provide it to their SMSF trustee on or before the date when the contribution is made. The election is not lodged with the ATO but must be retained in the records of the SMSF and a copy provided to the auditor.
Timing of making the Contribution
The timing depends on a number of factors such as whether an individual or a company or trust sold the business asset and which SBCGT concession applies. Seek professional advice in relation to the timing of making the contribution. The following are general guidelines.
| Disposal of asset by | Concession | Timeframe – contribution made to SMSF |
| Individual (55 years or over | 15 year exemption
Retirement Exemption |
On or before
the later of: Due date for lodgement of the individual’s tax return for the year in which the CGT event occurred; or 30 days after the capital proceeds are received |
| Company/trust (individual is aged 55 or over) | 15 year exemption | Company or trust must make a payment to the CGT concession stakeholder within two years after the CGT event. The individual must make the CGT cap contribution to their SMSF within 30 days of receiving the payment. |
| Individual (under 55) | Retirement Exemption | Payment, from the capital proceeds, must be made by the individual directly to their SMSF by later of:
When the individual chooses to use the retirement exemption i.e. when the individual lodges their tax return; or The day the capital proceeds are received |
| Company/trust (individual is under 55) | Retirement exemption | Payment must be made directly to the stakeholder’s SMSF by later of:
7 days of making the election (completing company/trust tax return), or 7 days after receiving the capital amount from the CGT event. |
| Company/trust (individual is 55 or over) | Retirement Exemption | Payment made to the stakeholder by later of:
7 days of making the election (completing company/trust tax return), or 7 days after receiving the capital amount from the CGT event. The individual must make the contribution to their SMSF within 30 days of receiving the payment. |
Hint – Generally, the timeframes allow for the SBCGT contribution to be made in the year following the CGT event. It can be useful to delay the contribution when a member’s total superannuation balance (TSB) is close to the general transfer balance cap (GTBC), which is $ 2.1 million, measured at 30 June 2026, for contributions made in the 2026/27 year. The GTBC cap affects the amount of NCC that can be contributed to your SMSF, but because SBCGT contributions are excluded from the NCC cap, you can put a lot more into super than you otherwise could.
Hint –Capital proceeds in relation to the retirement exemption can be received before the individual chooses to use the retirement exemption but must make the contribution to their SMSF immediately when the choice is made.
What happens if the Retirement Exemption Election exceeds $500,000?
The excess amount must be reported as member personal contributions and may result in excess NCC if the SMSF member has already maxed out their NCC cap.
What if my Election is made Late?
The election will not be effective, and the member contribution should be reported as a personal member contribution which could result in excess NCC.
How is a CGT Small Business Contribution Treated in a SMSF?
- it is tax free when received at the fund level
- it forms part of the member’s tax-free component
- it is not taxed when the contribution is paid to a member
- the contributor does not receive a tax deduction
Hint – a SBCGT contribution is subject to the same age-based rules as a NCC. An SMSF can accept NCC from a member under 75 or within 28 days after the end of the month in which the member turned 75 i.e. Fred turned 75 on 1 January 2027 and so he can make a NCC by the 28th February 2027. The SMSF member is not required to pass a work test in relation to NCC.
Tips and Traps in making a CGT Cap Election
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- Confirm the amount of the CGT cap which has been reported to the ATO.
- A member under 55 must contribute the CGT contribution to their SMSF (or another fund).
- Whilst the lifetime CGT cap is $1,935,000 (for the 2026/27 year) the cap on the retirement exemption is limited to $500,000 and cannot be exceeded.
- Is the SMSF member eligible to contribute to their SMSF?
- Generally, a SMSF trustee can only accept contributions from a member up to the age of 75 including CGT cap contributions.
- Timing is critical in relation to maximising superannuation contributions, making a CGT cap election and making a CGT contribution.
- Ensure the CGT cap election is made and executed before the contribution is made to the SMSF using the approved form.
- A trust/company often distributes capital proceeds from an eligible asset sale to the individual shortly after the event. The individual must contribute to their super fund within 30 days of receiving the proceeds to qualify for the 15-year exemption. Otherwise, if it is forgotten until it is time to prepare the member’s tax return in the following financial year it will be too late to make an eligible CGT contribution.
Do you want to learn more about Small Business CGT Concessions?
Give us a call on 1300 392 544 or get in touch online.