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    M&A guide

    Selling your business after 55: the small business CGT exclusion

    Turning 55 does not automatically make a business sale tax-free. Paragraph 57 of the Eighth Schedule to the Income Tax Act 58 of 1962 allows a qualifying individual to exclude part of a capital gain on the disposal of a small business interest or active business assets, subject to detailed conditions. Age, asset value, ownership history, involvement in the business and the structure of the sale all matter.

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    An exclusion, not a tax-free sale

    The relief excludes a capped amount of a qualifying capital gain. Proceeds above that amount, and any portion that does not qualify, remain subject to capital gains tax in the normal way.

    Who can qualify

    • Individuals aged 55 or older
    • Owners disposing because of ill-health, infirmity or superannuation
    • The estate of a deceased owner, in qualifying circumstances

    What counts as a small business

    SARS tests the market value of all the owner's business assets, not turnover or the asking price. According to current SARS guidance, the combined market value must not exceed R15 million, and the lifetime exclusion is R2.7 million per individual. Older guidance refers to R10 million and R1.8 million; the limit that applies depends on the date of disposal.

    Active business assets only

    The relief applies to assets used in carrying on the business, such as equipment and goodwill. Passive investments, such as financial instruments and rental property held for income, generally do not qualify.

    Ownership and involvement

    The individual must generally have held the interest for at least five years and been substantially involved in running the business during that period. Interests held through a company require the owner to meet the relevant shareholding thresholds.

    Check before you agree the deal structure

    Whether you sell shares or assets, and how the price is allocated, can change whether the exclusion is available. Ask your tax adviser to calculate your after-tax proceeds before you sign heads of terms.

    Common questions

    Does age 55 alone qualify me?

    No. The asset-value limit, holding period, involvement and active-asset requirements must also be met.

    Is the limit based on turnover?

    No. It is based on the market value of the business assets, not turnover.

    Can a company claim the exclusion in its own name?

    No. It is available to natural persons, including where they hold a qualifying interest in a company.

    What if I own more than one business?

    The assets of all your businesses are considered together for the limit, and the exclusion is a lifetime amount.

    Planning your exit?

    Tell us confidentially about your business. We work with your tax adviser so the structure supports your after-tax result.

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    Last updated October 2026. This guide is general information on South African regulatory procedure and is not legal advice on your specific matter. Dynamic Legal Services (Pty) Ltd is a private legal advisory firm and is not a government department or regulator.