In the 2015-16 Federal budget the Government announced the introduction of a new form of roll-over relief for small business as part of the Growing Jobs and Small Business Package.
The Small Business Restructure Roll-over Act is now law and will apply to asset transfers occurring on or after 1 July 2016.
The policy objective is to enable small businesses to restructure their operations in a tax efficient manner allowing transfers of assets to not only a company but also a sole trader, partnership or trust.
Broadly, this Act:
- provides greater flexibility for small business owners to change the legal structure of their business by allowing them to defer gains or losses that would otherwise be realised when business assets are transferred from one entity to another.
- provides small businesses with a new rollover for gains and losses arising from the transfer of active assets that are CGT assets, trading stock, revenue assets and/or depreciating assets as part of a genuine restructure of an ongoing business
- applies to transfers that do not result in a change in the ultimate economic ownership of the assets
- is in addition to rollovers currently available where an individual, trustee or partner in a partnership transfers assets to, or creates assets in, a company in the course of restructuring their business.
- extends the relief to include transfer of trading stock, revenue assets, and depreciating assets
A number of conditions will need to be satisfied so it is important that owners seek professional advice if they are considering a business restructure.