Small Business Restructuring ATO

Small Business Restructuring (SBR) is a regulated debt restructuring process established by the Australian government in January 2021 to help small businesses in financial difficulty. It's designed to be more accessible and cost-effective than traditional insolvency processes, allowing eligible small businesses to restructure their debts.

For some business owners, this process could prove to be time-consuming and even confusing at times. That’s why Macmillan Lawyers and Advisors has a team of experienced lawyers who are happy to walk you through the process from start to finish. In the meantime, here’s a guide to help you understand the process better.

Key Takeaways

• ATO’s restructuring process is for small businesses that are less than $1 million in debt.
• Trading stock, depreciating assets, and property all fall under assets that are eligible for transfer under the SBR.
• An SBR lawyer can help you with accurate reporting when applying for ATO’s SBR process.
• ATO and the Australian Securities and Investments Commission (ASIC) must be notified at certain stages of the SBR process.

When Should a Small Company Take Advantage of ATO’s Restructuring?

A small company should consider the ATO’s small business restructuring when debts are piling up, but your business is still viable. It helps you manage what you owe without shutting down. You keep control while working out a plan with your advisor and the ATO.

In the financial year 2023, there were 447 SBR appointments, which surged to 1,424 in financial year 2024. 2025 is set to have a lot more, if, as Business Daily Media reports, SBR appointments have gone up 3x in the first half of financial year 2025, is anything to go by.

Who is Eligible to Apply for the SBR?

The ATO’s small business restructuring process is designed for businesses with less than $1 million in liabilities. If you're finding it hard to pay debts but think the business can recover, this process can give you some breathing room. You stay in control of your business, and with help from a registered restructuring practitioner, you propose a repayment plan to creditors.

It’s best to act early — before creditors take legal action. This way, you have more options and can avoid liquidation or bankruptcy. Talk to your accountant or a restructuring professional to see if it’s right for your situation.

What Types of Assets Can Be Transferred Under the SBR?

Under Small Business Restructure (SBR), you can transfer most business assets, including stock, equipment, goodwill, and real estate used in the business. The goal is to move assets without tax consequences if rules are followed, helping your business stay afloat.

The SBR rollover allows small businesses to move active assets to a new legal structure without triggering capital gains tax (CGT). This includes:

• Trading stock
• Depreciating assets (e.g., machinery and tools)
• Real property (e.g., your business premises)
• Goodwill

To qualify, the restructuring must be genuine, not just done to avoid taxes, and the assets must be used in the business. Personal-use assets or passive investments like rental properties generally don’t qualify. Always get advice from a qualified tax professional to make sure your restructuring meets all the conditions.