We’re concerned some wealthy groups are using the small business restructure roll-over (SBRR) for reasons other than a genuine restructure of an ongoing business.
The SBRR allows the tax-free transfer of active assets from one entity to another, but only when that transfer is part of a genuine restructure.
We’re engaging with some tax professionals and their clients to ensure the required conditions have been met, including whether a genuine restructure has occurred. Some indicators of a genuine restructure are:
- a bona fide commercial arrangement
- maintaining economic ownership of the business
- continued use of the transferred assets in the business
- a new structure that may have been adopted when establishing the business if appropriate professional advice was obtained
- changes that facilitate growth rather than divestment
- changes that aren't artificial or unduly tax driven.
The SBRR also includes a safe harbour rule that provides an alternative way of meeting the requirement that a restructure is genuine.
To ensure SBRR eligibility, or to amend any errors or misuse, we have a range of resources available.
Contact us to:
- correct a mistake
- engage early for advice
- apply for a private ruling to attain certainty regarding eligibility for the SBRR
- seek a pre-lodgment compliance agreement for any commercial deals.