Tax implications of a business restructure
Tax exemptions may apply to small businesses going through a restructure provided they meet certain criteria.
Typically when a business is sold, you would have to pay income tax due to transferring assets. However, when a business is restructuring, the ownership of assets remains unchanged, and there is instead a rollover. This allows you to transfer assets as a part of the restructure without having to pay income tax on that transfer.
Your business may be eligible for the small business restructure rollover provided that:
- The change is a genuine restructure as opposed to an artificial or inappropriately tax-driven scheme
- There is no change to ultimate economic ownership in the sense that the economic owners of an asset are not changed or transferred, including if there is more than one owner of that asset
The commissioner’s remedial power has repealed laws that incurred tax consequences on depreciating assets during a business restructure. When transferring depreciating assets, like cars during a business restructure, the commissioner’s remedial power will automatically apply, and there is nothing different you need to do to qualify for this tax exemption.