In short

The CGT cap election under s.292-100 lets retiring business owners contribute up to $1,865,000, the FY25-26 lifetime limit, of qualifying small business CGT concession proceeds into super, entirely outside the non-concessional contributions cap. Combined with standard NCC bring-forward, this can move over $2.2 million into super in a single year, treated as 100% tax-free component for the eventual pension.

For pre-retirees selling a small business — a professional practice, a family company, a farming operation, a commercial property used in business — the question of how to move the sale proceeds into super for retirement income is one of the highest-value planning conversations available. The standard non-concessional contributions cap of $120,000 a year (or $360,000 under three-year bring-forward) for FY25-26 (ATO — non-concessional contributions cap, https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/super/growing-and-keeping-track-of-your-super/caps-limits-and-tax-on-super-contributions/non-concessional-contributions-cap, accessed 6 May 2026) would otherwise restrict the client to a multi-year contribution sequence, with substantial proceeds sitting outside super for years. Section 292-100 of the Income Tax Assessment Act 1997 (https://classic.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s292.100.html, accessed 6 May 2026) provides a structurally different path for sale proceeds that qualify under the small business CGT concessions: the CGT cap allows the eligible amount to be contributed to super in addition to the NCC cap, up to a lifetime limit of $1,865,000 for FY25-26 (indexed annually). Combined with standard NCC bring-forward, a retiring business owner can move more than $2.2 million into super in a single year, with substantial downstream consequences for retirement income, death benefit tax, and Centrelink positioning.

The CGT cap is a lifetime cap, indexed annually for AWOTE movements, distinct from the NCC cap and the concessional contributions cap. A member who has fully used the CGT cap in a previous business sale cannot use it again — the cap is depleted as it's used, with the indexation increase from year to year added to the residual unused amount. For most clients this is not a practical limitation because most clients only have one significant business sale event. But for serial business owners or those with multiple qualifying sale events across decades, the lifetime nature of the cap matters for planning. The contribution under the CGT cap does not affect the member's TSB-driven NCC bring-forward eligibility for the year of contribution itself — the two caps operate independently — though the post-contribution TSB obviously affects subsequent years' NCC bring-forward eligibility through the standard threshold mechanics.

The CGT cap is unlocked by qualifying small business CGT concessions under Division 152 of ITAA 1997 (ATO — small business CGT concessions, https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/small-business-cgt-concessions, accessed 6 May 2026). Two of the small business concessions trigger CGT cap eligibility. The 15-year exemption (s.152-105 of ITAA 1997, https://classic.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s152.105.html, accessed 6 May 2026) applies where the small business CGT entity has held the active asset for at least 15 years and the individual is aged 55 or over and either retiring in connection with the sale or permanently incapacitated. The capital gain is fully exempt from CGT, and the eligible proceeds (up to the CGT cap) can be contributed to super under s.292-100. The retirement exemption (s.152-305 onwards) applies where the small business CGT entity disposes of an active asset and elects to disregard a capital gain up to a lifetime limit of $500,000 of capital gain per individual; for individuals under 55, the exempt amount must be paid to a complying super fund (or RSA), and for over-55s the exempt amount can be contributed under the CGT cap or taken in cash. The other small business CGT concessions — the 50% active asset reduction and the small business rollover — don't trigger CGT cap eligibility; they reduce or defer the gain in different ways without unlocking the super contribution mechanic.

The qualifying tests for Division 152 are technical and need specialist tax advice. Broadly, the asset must satisfy the active asset test (used in business for the relevant period), the entity must satisfy the maximum net asset value test of $6 million net assets or alternatively the small business turnover test of $2 million aggregated turnover, and the age and retirement test must be met for the specific concession claimed. For business owners in family company or trust structures, the connected entity and affiliate tests add complexity; the ownership and control structures matter for whether the small business CGT concessions apply at all. For most retiring sole traders and partnerships, the tests are relatively straightforward; for family-trust-controlled businesses, specialist tax advice is essential to confirm eligibility before relying on the structure.

The election to use the CGT cap is made by lodging the approved-form CGT cap election notice with the receiving super fund either before or at the time of contribution, identifying the contribution as a CGT cap contribution under s.292-100, specifying the qualifying concession (15-year exemption or retirement exemption), and confirming the cap amount being used. The fund records the contribution as a CGT cap election rather than a standard NCC. The timing of the contribution must generally be made by the day the income tax return is lodged for the income year in which the relevant CGT event happened — or 30 days after receiving the proceeds, depending on the specific concession invoked. If the timing is missed or the election not properly made, the contribution defaults to standard NCC treatment, with potential cap excess consequences for substantial amounts.

The integrated sale-plus-super sequence for a retiring business owner has a specific shape. Pre-sale planning identifies CGT concession eligibility, models the sale structure, and plans the timing — this should ideally happen months before the sale, not weeks. Sale execution delivers the proceeds. CGT calculation and concession claim is where the tax adviser calculates the gain, applies the qualifying concessions, and identifies the eligible CGT cap amount. CGT cap election with super fund lodges the s.292-100 election with the chosen fund. Contribution happens within the timing window. Standard NCC contributions can sit on top if bring-forward is available. Pension commencement captures the improved tax-free percentage. For a $1.865 million CGT cap contribution plus $360,000 NCC bring-forward, the integrated sequence moves $2.225 million into super in one year — a structural step-change for the client's retirement balance.

The component treatment is favourable: the CGT cap contribution is treated as 100% tax-free component for the proportioning rule purposes under ITAA 1997 s.307-220 (https://classic.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s307.220.html, accessed 6 May 2026). So a member's pension commenced after the CGT cap contribution will have a substantially improved tax-free percentage compared to the pre-contribution position. For a client who would naturally have had 5% tax-free percentage on their existing super, contributing $1.5 million under CGT cap may produce a 75% tax-free percentage on the post-contribution balance. The downstream consequence at death is significant: where the eventual beneficiaries include adult independent children (non-tax-dependants), the higher tax-free percentage materially reduces the death benefit tax cost. For business owners who built substantial wealth in the business and want it to pass to children with minimal super tax friction, the CGT cap contribution is one of the largest planning levers available — see the related article on articles/2026-05-04-pension-proportioning-rule-tax-free-lock-in for the proportioning rule mechanics.

The Centrelink interaction is also generally favourable for clients eventually claiming Age Pension. Sale proceeds held outside super are fully assessable for the asset test (and produce deemed income for the income test), often eliminating Age Pension entitlement. Sale proceeds moved into super under CGT cap stay in the super system: until the member moves the proceeds to pension phase, the accumulation balance is excluded from the member's Centrelink assets if they are below Age Pension age (typically 67). For a 60-year-old selling a business and keeping the CGT cap contribution in accumulation until 67, the wealth is sheltered from Centrelink assessment for those seven years. After 67, the balance moves into pension phase (subject to TBC) and is then assessable, but the member also has Age Pension claim eligibility at that point.

The practical advice work for retiring business owners has a specific shape. Surface the CGT cap opportunity in the pre-sale planning conversation, ideally well before sale. Coordinate with the tax adviser on eligibility — Division 152 tests, qualifying concession choice, eligible amount calculation. Plan the receiving super fund — the fund must accept CGT cap elections and record the contribution correctly. Time the contribution within the prescribed window. Combine with standard NCC bring-forward where available. Plan the pension commencement to capture the proportioning benefit. Coordinate the Centrelink positioning for the eventual Age Pension claim. The total exercise typically runs across 6-18 months from pre-sale planning to post-sale pension commencement, and getting each step right makes a material difference to the long-term outcome.

What do worked planning examples show?

These two cases show how the CGT cap election plays out for typical retiring business owner scenarios. Illustrative only — not personal advice — using FY25-26 figures.

Case 1 — David, 62, selling his accounting practice for $1.8 million after 22 years of ownership. David qualifies for the 15-year exemption under ITAA 1997 s.152-105 (held >15 years, age 55+, retiring in connection with sale). His other super balance is $400,000 (mostly taxable component from SG over his career). On these facts, the rational pathway is for the tax adviser to confirm 15-year exemption qualification and identify the eligible CGT cap amount (the full $1.8m sale proceeds, comfortably below the $1,865,000 FY25-26 cap). David lodges the CGT cap election in the approved form with his chosen super fund and contributes the $1.8m within the timing window (by the income tax return lodgement day for the year of the CGT event). He also confirms TSB at 30 June 2025 was below the bring-forward threshold for full three-year bring-forward (TSB <$1,760,000 — likely true given his pre-sale super balance) and contributes the standard NCC bring-forward of $360,000 in the same year. Total contribution: $2.16 million. Combined with his existing $400k, post-contribution balance is around $2.56m. He commences a pension with the improved tax-free percentage (now around 70% tax-free on a substantially larger balance, with the CGT cap and NCC contributions both classified as 100% tax-free under s.307-220), and the residual amount above his $2.0m TBC stays in accumulation. His eventual Age Pension claim at 67 is positioned favourably given the super shelter while under Age Pension age. The trap to avoid is failing to make the s.292-100 election in approved form within the timing window — the contribution would then default to NCC, exceed the cap by $1.44 million ($1.8m less the $360k bring-forward), and trigger the excess NCC release election process for an enormous excess amount.

Case 2 — Margaret, 68, selling a long-held family farm for $2.4 million. Margaret qualifies for the 15-year exemption (40+ years on the farm, retiring). She has $200,000 in existing super. On these facts, the eligible CGT cap amount is capped at the FY25-26 lifetime limit of $1,865,000, so $1.865m can flow into super under the CGT cap. The remaining $535,000 of sale proceeds is held outside super or contributed under standard NCC bring-forward (subject to TSB at 30 June 2025 — likely full three-year bring-forward of $360,000 available given her low pre-sale super balance). With $360,000 NCC bring-forward in the year, Margaret can contribute another $360k of the residual proceeds, leaving $175,000 for non-super investment. Her post-contribution super balance is approximately $2,425,000, with a high tax-free percentage from the CGT cap and NCC contributions combined. She commences a pension at her full personal TBC ($2.0m) with the residual ~$425k in accumulation. The trap to avoid is treating the $2.4m as one homogenous receipt without the integrated CGT cap election — the difference between using the election ($1.865m to super in year one) and not using it (only $360k via NCC bring-forward) is roughly $1.5 million of super positioning that would otherwise not be achievable, with the death-benefits-tax consequence for any eventual non-tax-dependant beneficiaries amplifying that gap by tens of thousands of dollars.

For retiring small business owners, section 292-100 and the CGT cap election are the structural mechanism that makes substantial business sale proceeds available for super in a single year. The mechanic combines with the small business CGT concessions (specifically 15-year exemption and retirement exemption) to allow up to $1,865,000 for FY25-26 to flow into concessional super outside the NCC cap, with the standard NCC bring-forward providing additional cap on top. The opportunity is specific to qualifying business sales — it doesn't apply to standard investment property sales, share portfolio realisations, or other non-business asset disposals. For clients who do qualify, the timing and election discipline is critical, and integrated advice from tax and financial planning specialists captures the full value. The pre-sale planning conversation, ideally months before the sale, is where the integrated advice has the highest impact.

Sources

Key takeaways

  • Section 292-100 allows proceeds qualifying under the small business 15-year exemption or retirement exemption to be contributed to super under a separate lifetime CGT cap of $1,865,000 for FY25-26, on top of the standard non-concessional contributions cap.
  • Combined with the standard NCC three-year bring-forward of $360,000, a retiring business owner can move more than $2.2 million into super in a single financial year.
  • The election must be lodged with the super fund in approved form, generally by the day the tax return is lodged for the year of the CGT event or within 30 days of receiving the proceeds — missing the window means the contribution defaults to standard NCC treatment and can trigger a large excess.
  • A CGT cap contribution counts as 100% tax-free component under s.307-220, which can dramatically raise the tax-free percentage locked in when the member's pension commences, reducing death benefit tax for non-tax-dependant beneficiaries such as adult children.
  • Sale proceeds contributed to super under the CGT cap and kept in accumulation phase are excluded from Centrelink's asset test for a member under Age Pension age, unlike the same proceeds held outside super.

Frequently asked questions

What is the CGT cap and who can use it?

The CGT cap under ITAA 1997 s.292-100 is a separate lifetime contribution limit — $1,865,000 for FY25-26 — available to business owners whose sale proceeds qualify under the small business 15-year exemption or retirement exemption in Division 152. It lets eligible proceeds be contributed to super without counting against the standard non-concessional contributions cap.

How much can a retiring business owner get into super using the CGT cap?

Up to the FY25-26 lifetime CGT cap of $1,865,000, plus the standard non-concessional contributions cap of up to $360,000 under the three-year bring-forward rule if eligible — potentially more than $2.2 million into super in a single financial year from one qualifying business sale.

What happens if the CGT cap election isn't made properly?

If the election isn't lodged in approved form within the required timing window, the contribution defaults to standard non-concessional contribution treatment. For a large business sale amount, this can create a substantial excess above the standard cap, triggering the excess contributions release process rather than the intended CGT cap treatment.

Does a CGT cap contribution help reduce death benefit tax for my children?

Often, yes. CGT cap contributions are treated as 100% tax-free component, which raises the tax-free percentage locked in when a pension is later commenced. Since non-tax-dependant beneficiaries — typically adult independent children — pay tax only on the taxable component of a death benefit, a higher tax-free percentage from a CGT cap contribution can meaningfully reduce their eventual tax bill.

A note on advice. This article is general information only and doesn't account for your personal circumstances. Everyone's situation is different — before acting, it's worth talking it through with a licensed adviser who knows your full picture.