Changes announced in the 2016 Federal Budget grant small business owners the right to use the sale of their business to contribute more to their super than the introduced $500,000 lifetime after-tax contribution cap.

As the small business retirement exemption will continue, small business entities can contribute up to $500,000 of sale proceeds into their superannuation in addition to the new cap of $500,000. This provides small business owners with the opportunity to potentially double their contributions.

Small business owners will qualify for the exemption providing they have a net worth of less than $6 million or a business turnover, which currently stands at less than $2 million. Taxpayers must contribute the $500,000 to their superannuation fund before they lodge their annual return.

In addition, eligible taxpayers can make super contributions that do not count towards their non-concessional contributions cap, providing the contribution is the sale proceeds from the CGT asset that is exempt from capital gains tax.