The Small Business Restructure Rollover: Changing Structure Without Triggering CGT
Moving from a sole trader to a company, or restructuring between a trust and a company, would normally trigger a CGT event on the transfer of business assets — even where no genuine sale has occurred and the same people still control the business afterward. The small business restructure rollover exists specifically to remove this barrier, allowing eligible businesses to change legal structure without an immediate CGT liability.
What the Rollover Actually Allows
Where the conditions are met, assets can be transferred from one entity to another as part of a genuine restructure without triggering CGT, GST, or in some states, stamp duty on the transfer. The tax cost base of the asset carries over to the new entity, meaning the tax isn't eliminated — it's deferred until the asset is eventually disposed of outside the business, at which point CGT is calculated against the original cost base.
The Key Conditions
Where This Commonly Trips Up
The "genuine restructure" test is the one businesses most often get wrong — if the restructure coincides closely with a planned sale of the business, or ownership genuinely changes as part of the process (new investors coming in, existing owners cashing out), the rollover can be denied on the basis that it wasn't a genuine restructure but effectively a disposal.
What to Check Before Restructuring
- Confirm both entities meet the eligibility turnover threshold.
- Confirm the same people retain their economic ownership interest through the new structure.
- Time the restructure separately from any sale process — don't restructure and sell in the same continuous transaction.
- Get the rollover eligibility confirmed before transferring any assets, since this isn't something correctable after the transfer has occurred.
RBizz reviews restructure eligibility before assets are transferred — get in touch before you change your business structure.
