What you set up years ago may well have been correct at the time but it may not be optimal for your current situation, particularly if your business has expanded.
In past times there were usually stamp duty and capital gains tax costs that needed to be built into any restructure decision and often those costs made restructure not viable.
From 1 July 2016 stamp duty and capital gains tax laws changed markedly –
- Stamp duty on business assets other than land was abolished in NSW; and
- New tax legislation usually referred to as “small business restructure rollover” (“SBR”) took effect. These provisions enable businesses whose aggregate annual turnover is less than $2 million to restructure their business asset holdings without income tax or capital gains tax liabilities.
The tax law change is particularly significant. Unlike other “rollover” provisions that existed before that time the SBR rollover allows transfer of assets between different types of business structure. Under pre-existing CGT rollover rules, individuals and trusts could transfer to companies but under SBR assets can be transferred from the existing structure into any other form of structure. For instance trust to trust, company to trust and trust to company transfers are all possible. The main exclusion is that transfers to self-managed superannuation funds are not allowed.
The SBR rollover is also wider than the previous provisions in that it allows not only CGT assets to be transferred but also depreciating assets and trading stock.
Whilst stamp remains an issue for restructures involving land, there are concessions available particularly for farming land which can be very helpful in reducing or avoiding stamp duty cost.
Restructuring a business is complicated and expert advice needs to be obtained.
At Everingham Solomons we have the expertise to work with business operators and their accountants to optimise business structures Because Helping You is Our Business.
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