Author: tory_o(Initiate)Initiate 5 Mar 2026
Farmer has sold a portion of land than satisfies active asset test. He will use proceeds to buy a tractor. Does this qualify as a replacement asset? I note the following phrase from the ATO website (link below) "A depreciating asset may also be an active asset and may be chosen as a replacement asset under the small business rollover."
I take this to mean that a tractor could be a replacement asset so long as it is not depreciated.
Is this interpretation correct?
Thank you
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1 replies
Would be best to see a tax agent or ask ATO advice directly
"A depreciating asset may also be an active asset and may be chosen as a replacement asset under the small business rollover."
"A CGT asset is an active asset if you (or your affiliate or entity connected with you) use it, or hold it ready for use, in running a business (or if it is an intangible asset, it is inherently connected with the business)."
"Depreciating assets, such as plant, are CGT assets."
"CGT does not apply to depreciating assets used solely for taxable purposes.
This includes:
- business equipment
- items in a rental property.
Gains or losses (balancing adjustments) made on these assets are treated as assessable income or claimed as deductions.
However, if you have used a depreciating asset for private purposes, CGT may apply"
Might be as long as tractor is used in the business to be an active asset.
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