As the 2025–26 financial year begins, many small and medium-sized business owners in Australia are re-evaluating their structures and strategies in response to economic uncertainty, rising costs, and tighter margins.
If your business is experiencing financial strain or is looking to improve operational efficiency, the Small Business Restructure (SBR) program could offer a practical, low-cost solution. Introduced in 2021, this program allows eligible businesses to reorganise their affairs and debts with the help of a qualified Restructuring Practitioner, all while continuing to trade.
In addition, businesses may also benefit from the small business restructure roll-over, a tax relief that allows eligible businesses to transfer active assets between entities without triggering an immediate tax liability—provided it’s part of a genuine restructure.
Who Is Eligible?
To qualify for the small business restructure roll-over, the following conditions must be met:
- The entity (or entities involved) must have an aggregated turnover of less than $10 million.
- The restructure must involve the transfer of active assets such as:
- CGT assets
- Trading stock
- Revenue assets
- Depreciating assets
- The restructure must be genuine, not solely tax-driven.
- There must be no change in the ultimate economic ownership of the assets.
- Assets must be used, or held ready for use, in the course of business.
A safe harbour rule can assist in determining whether a restructure qualifies as genuine.
How the Roll-Over Works
Choosing to apply the small business restructure roll-over comes with key tax advantages:
- No income tax liability arises at the time of asset transfer.
- The transferee inherits the tax cost base of the asset from the transferor.
- There are no capital gains tax (CGT) triggers, unless the asset is later disposed of.
- Specific rules apply for CGT assets, trading stock, depreciating assets, and revenue assets.
- Additional considerations include stamp duty, GST implications, and potential application of anti-avoidance rules.
Note: This roll-over does not apply to assets like loans to shareholders, which are not considered active assets.
How the Small Business Restructuring (SBR) Process Works
The SBR process is designed to be quick and efficient:
- It runs over 35 business days (extendable by 10 days).
- A licensed Restructuring Practitioner helps develop a restructure plan, which may include:
- Cash settlements to creditors
- Future trading contributions
- Debt or equity injections
The Australian Taxation Office (ATO) often plays a key role and typically engages early to assess and provide feedback on proposed plans. Once approved, any tax debts included in the plan are legally and permanently forgiven, which can provide significant financial relief.
Conclusion
The new financial year is the perfect time to assess whether your current business structure still supports your goals. Whether you’re facing financial difficulty or simply planning for future growth, restructuring your business—either through the SBR program or the small business restructure roll-over—can offer both short-term relief and long-term benefits.
Working with professionals, especially a Restructuring Practitioner and a tax adviser, is essential to ensure compliance and maximise the opportunity.
FAQs
- What is the main benefit of the small business restructure roll-over?
It allows eligible businesses to transfer active assets between entities without triggering an immediate income tax liability, helping to streamline or simplify operations. - Does the SBR process mean I’m going into insolvency?
No. The SBR program is designed to allow viable businesses in temporary financial difficulty to restructure and continue trading. - Can I restructure if my business has debts with the ATO?
Yes. The ATO often participates in restructure plans and may agree to waive certain debts if the proposal is viable and fair to all creditors. - What qualifies as a ‘genuine’ restructure?
A genuine restructure typically involves changes that improve efficiency, succession planning, or long-term viability—not just minimising tax. The ATO’s safe harbour rule can help clarify this. - Are there costs or risks involved in restructuring?
Yes. There may be professional fees, potential stamp duty or GST consequences, and risks if the restructure isn’t executed properly. Always seek expert advice before proceeding. - How do I start the SBR process?
Engage a registered Restructuring Practitioner. They’ll assess your situation, develop a restructure plan, and coordinate with your creditors, including the ATO.
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