Tax

Business Restructures

Want to change your business structure? There are often several ways. We can help assess and navigate the available options, and implement proposed restructures.

Being in the right business structure can save money, help to protect your assets and make doing business easier. There are also opportunities to move into an ideal structure without creating an excessive tax liability. In some circumstances, restructures can be done tax-free.

We help you to restructure your business without making the costly mistake of triggering an unnecessarily large tax liability.

We assist with:

all forms of restructures, including:
- ~restructuring from a trust to a company;
- ~restructuring from a company to a trust;
- ~restructuring from a sole trader to a company or trust; and
- ~complex restructures.
tax advice including:
- scrip-for-scrip CGT rollovers;
- the small business CGT concessions; and
- the small business restructure rollover.
pre-transaction restructures;
succession planning restructures; and
implementing restructures, including the transfer of a business, employees, assets and finance arrangements.

Approach

Our usual approach is to:

provide you with a clear and transparent fee quote;
discuss your requirements, goals and desired outcomes;
work collaboratively with other professional advisors;
deliver our work to you in accordance with your wishes; and
regularly update you and your professional advisors during the process.

Fill in the form and someone from our team will be in contact shortly.

How do you charge?

Trust is one of our core values. We pride ourselves on not causing 'bill shock'. Our usual approach is to provide you with a clear and transparent fee quote to ensure that there are no surprises. You can then make an informed decision about whether you want to proceed or not.

Why should I restructure?

A restructure may be beneficial for many reasons. For example:

to improve asset protection;
your business may have ‘outgrown’ its current structure;
to facilitate a family business succession;
to assist with a future business sale; or
to improve tax outcomes.

How can Velocity Legal assist with a restructure?

We advise on all aspects of business restructures. This includes considering the possible ways in which a business restructure could occur, the tax consequences of the restructure, the legal documents (such as sale contracts) necessary to implement the restructure, and any engagement with the ATO that may be desired. We also work collaboratively with other professional advisors such as accountants and financial planners.

What are the tax issues to consider when restructuring?

Tax consequences are a key consideration when restructuring. Tax consequences often inform both the decision about whether a restructure should take place, and also the best way of implementing the restructure.
Primary tax considerations in restructures include:

capital gains tax (CGT) – rollover relief may be available. For example, the small business restructure rollover or another CGT rollover;
Good and Services Tax (GST) – it is essential to ensure that no unintended GST consequences arise in the process of the restructure; and
duty – where land is involved, landholder duty and corporate reconstruction relief may be applicable.

What is the Small Business Restructure Rollover?

From 1 July 2016, rollover relief may be provided to small business entities (SBEs) and associated entities. A SBE restructure rollover may be available to an eligible entity when the following requirements are met:

genuine restructure – the transaction must be a genuine restructure. A special safe harbour rule may be available where there is no change in economic ownership of significant business assets (excluding trading stock) within 3 years of the restructure;
*SBE requirement *– the parties involved in the transaction must either be an SBE, connected with an SBE, in partnership with a SBE or an affiliate of an SBE;
ultimate economic ownership– the restructure must not materially change the ultimate economic ownership of the asset or the proportional shares of the ownership. Special rules apply to non-fixed trusts that are family trusts; and
*CGT active asset requirement *– the relevant asset must be an ‘active asset’.

Can you prepare legal documents to implement a restructure?

Yes, we regularly assist with the implementation of restructures. This includes not only preparing the legal documents necessary to implement a restructure, but also helping our clients to manage the other required deliverables (e.g. regulatory approvals, landlord consent, financier consent, dealing with registered security interests, transfer of employment arrangements, and other similar items).

Some of the legal documents that we commonly prepare include:

business sale contracts;
share sale agreements;
subscription agreements;
shareholders agreements;
leases; and
company resolutions.

What happens to our current Shareholders Agreement / Unitholders Agreement when we restructure?

Most restructures will require a new co-ownership agreement to be prepared. This is because the business will likely be operated from a different entity because of the restructure. So, a business restructure is the perfect juncture to re-evaluate the suitability of your existing co-ownership agreement. For more information about these agreements, please click here.