We’re checking that the small business restructure roll-over is being used correctly.

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 harbor 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-lodgments compliance agreement for any commercial deal.

If you have any questions, feel free to ask them in the comment section. We will be happy to answer all your queries.