The Government has introduced the “Tax Laws Amendment (Small Business Restructure Roll-over) Bill 2016”.

What does this mean for me?

It’s fantastic news for business owners who have been set-up in a dreaded company structure, at present this structure can be extremely difficult to transfer out of, due to capital gains tax (CGT) implications. This bill will provide an enormous amount of flexibility to allow the business owner to change into a tax effective and asset protected structure that company structures simply cannot provide.

The Bill:

  • 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 roll-over for gains and losses arising from the transfer of active assets that are CGT assets, trading stock, revenue assets and/or depreciating assets between entities 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 roll-overs currently available where an individual, trustee, or partner in a partnership transfers assets to, or creates assets in, a company in the course of incorporating their business. Ideal for large businesses only
  • extends the relief to include transfer of trading stock, revenue assets, and depreciating assets.

These changes are expected to apply to transfers occurring on or after 1 July 2016.

If your business is set-up in a company structure, please come in and talk to me about the structure, the correct way your business should be set-up and why!                                                     

Contact me today – 03 8393 1020.

Pat Mannix, Partner, Paris Financial

Follow me on Twitter @mannix_pat