Small Business Restructure Roll-over and CGT Concessions in Australia: A 2026 Tax Agent Guide

Restructuring a business is one of the most consequential decisions an Australian business owner can make — and one of the most tax-sensitive. Done correctly, a restructure can reposition your business for growth, protect assets, and reduce your long-term tax burden. Done incorrectly, it can trigger significant capital gains tax (CGT) liabilities, stamp duty, and GST consequences that far outweigh any commercial benefit. A registered tax agent is essential to navigating this landscape safely.

Understanding the Small Business Restructure Roll-over

The Small Business Restructure Roll-over (SBRR), introduced under Subdivision 328-G of the Income Tax Assessment Act 1997, allows eligible small businesses to transfer active assets between entities without triggering immediate income tax consequences. It is designed for "same owners, new structure" scenarios — situations where the business continues under different legal arrangements but the underlying economic ownership remains unchanged.

The SBRR can apply to CGT assets, trading stock, revenue assets, and depreciating assets. This breadth makes it a powerful tool for businesses looking to move from a sole trader or partnership structure into a company or trust, or to consolidate multiple entities into a cleaner operating structure.

Critically, the SBRR does not permanently eliminate the tax liability — it defers it. The receiving entity takes on the transferring entity''s cost base, meaning the deferred gain will crystallise when the asset is eventually disposed of. However, by that point, the business may be in a position to access other concessions, including the small business CGT concessions, to reduce or eliminate the gain entirely.

Eligibility Requirements for the SBRR

To access the SBRR, a business must satisfy several conditions. Understanding these requirements before initiating any restructure is critical — a tax agent can assess your eligibility and identify any structural issues that could disqualify you.

• Aggregated turnover under $10 million — The business must have an aggregated annual turnover of less than $10 million. This threshold already aligns with the broader small business entity definition used across the tax system.
• Genuine restructure of an ongoing business — The transfer must be part of a genuine restructure, not a scheme designed primarily to obtain a tax benefit. The ATO scrutinises arrangements that lack commercial substance.
• No change in ultimate economic ownership — The individuals who ultimately own the business must remain the same before and after the restructure. Changes in ownership percentage or the introduction of new owners can disqualify the rollover.
• Active assets only — The rollover applies only to assets used in the course of carrying on a business. Passive investment assets, such as shares held for investment purposes, are generally excluded.
• Three-year safe harbour — The ATO provides a safe harbour rule: if the restructured entity satisfies specific requirements for three years following the transfer, the restructure is treated as genuine. Breaching the safe harbour — for example, by selling the business or changing ownership within three years — can cause the rollover to unwind, triggering the deferred tax liability.

Small Business CGT Concessions: A Complementary Framework

The SBRR works alongside the small business CGT concessions, which can reduce or eliminate capital gains on the disposal of active business assets. These concessions are among the most generous in the Australian tax system and are frequently used in conjunction with a restructure or business sale.

The Four Concessions

• 15-year exemption — If you have owned the asset for at least 15 years, are aged 55 or over, and are retiring or permanently incapacitated, the entire capital gain can be disregarded. This is the most powerful concession available.
• 50% active asset reduction — Automatically reduces the capital gain by 50% if the basic eligibility conditions are met. This can be stacked with the general 50% CGT discount for individuals and trusts, potentially reducing the taxable gain to just 25% of the original amount.
• Retirement exemption — Allows you to disregard capital gains up to a lifetime limit of $500,000. If you are under 55, the exempt amount must be contributed to superannuation.
• Small business rollover — Defers the capital gain for up to two years, or until a replacement asset is acquired. This provides flexibility when the timing of a sale does not align with your tax planning strategy.

To access these concessions, the business must satisfy either the $2 million aggregated turnover test (increasing to $10 million from 1 July 2027) or the $6 million maximum net asset value (NAV) test. A registered tax agent can determine which test applies to your circumstances and ensure you meet the conditions before any disposal occurs.

Common Mistakes and Red Flags

The SBRR and small business CGT concessions are powerful but technically demanding. The following errors are frequently encountered by businesses that attempt to navigate these rules without professional guidance.

• Failing the genuine restructure test — The ATO will deny the rollover if the primary purpose of the restructure is to obtain a tax benefit rather than to achieve a legitimate commercial outcome. Documenting the commercial rationale for the restructure is essential.
• Breaching the three-year safe harbour — Selling the business, changing ownership, or ceasing to carry on the business within three years of the restructure can cause the rollover to unwind. Tax agents advise clients to plan carefully around this window.
• Overlooking state-based transfer duties — While the SBRR provides income tax relief, it does not automatically exempt the transfer from stamp duty or land transfer duty in states such as New South Wales, Victoria, or Queensland. Some states offer their own concessions for genuine business restructures, but these must be applied for separately.
• Ignoring GST consequences — Transfers of assets between entities may trigger GST obligations unless the transfer qualifies as a going concern or another GST-free supply. A tax agent working alongside a GST specialist can identify and manage these risks.
• Misidentifying active assets — Not all business assets qualify as active assets for the purposes of the SBRR or the CGT concessions. Goodwill, intellectual property, and certain financial instruments have specific rules that must be carefully assessed.

Australian Regulatory Context and 2027 Reforms

The SBRR and small business CGT concessions are administered by the Australian Taxation Office (ATO) under the Income Tax Assessment Act 1997. The ATO has published detailed guidance on the genuine restructure requirement, including a safe harbour provision in Tax Ruling TR 2016/3 and Practical Compliance Guideline PCG 2016/16.

Significant reforms are scheduled to take effect from 1 July 2027. The turnover threshold for the 50% active asset reduction will increase from $2 million to $10 million, bringing it into alignment with the broader small business entity threshold. This change will make the concession available to a much larger cohort of Australian businesses.

Separately, the federal government has announced a 30% minimum tax on discretionary trusts, effective from 1 July 2028. To assist businesses in adjusting to this change, a time-limited three-year restructure rollover will be available from 1 July 2027, allowing businesses to transfer assets out of discretionary trusts without immediate income tax consequences. Tax agents are already advising clients to begin planning for this transition well in advance of the 2027 start date.

The Tax Practitioners Board (TPB) registers and regulates tax agents in Australia. Only a registered tax agent is legally permitted to provide tax advice and prepare tax returns for a fee. When engaging a tax agent for restructure advice, verify their TPB registration at the TPB register.

Questions to Ask Your Tax Agent

Before proceeding with any business restructure, the following questions will help you assess your tax agent''s expertise and ensure the restructure is structured correctly from the outset.

1. Do I satisfy the aggregated turnover or NAV test for the small business CGT concessions? — Eligibility must be confirmed before any disposal or restructure is initiated.
2. Does my proposed restructure qualify as a genuine restructure under the ATO''s guidelines? — Your tax agent should be able to document the commercial rationale and assess the risk of ATO challenge.
3. What are the stamp duty and GST implications of the proposed transfer? — Income tax relief does not automatically extend to other taxes.
4. How does the three-year safe harbour affect my post-restructure plans? — If you are planning to sell the business within three years, the SBRR may not be appropriate.
5. Should I be planning for the 2027 turnover threshold increase and the 2028 discretionary trust reforms? — Proactive planning now can significantly reduce your tax exposure under the new rules.
6. Can I stack the 50% active asset reduction with the general CGT discount? — In many cases, yes — but the sequencing and eligibility conditions must be carefully managed.

How MyMoney® Can Help

Business restructuring is not a DIY exercise. The interaction between the SBRR, the small business CGT concessions, stamp duty, GST, and the upcoming 2027 and 2028 reforms creates a complex web of obligations and opportunities that only an experienced registered tax agent can navigate safely.

MyMoney® connects Australian business owners with TPB-registered tax agents who specialise in small business restructuring, CGT planning, and ATO compliance. Whether you are considering a restructure now or planning ahead for the 2027 reforms, the right tax agent can save you significantly more than their fee.

Post a Brief on MyMoney® to receive tailored proposals from registered tax agents experienced in small business restructuring, or Browse Tax Agents to find a specialist who understands your industry and circumstances.