From 1 July 2016, small businesses will be able to change their legal structure without incurring any income tax liability for certain transactions. This applies when transferring active assets that are CGT assets, trading stock, revenue assets and depreciating assets.

To use this roll-over, each party to the transfer must also be a small business entity or an entity that:

  • has an affiliate that is a small business entity
  • is connected with an entity that is a small business entity
  • is a partner in a partnership that is a small business entity.

The roll-over is available to taxpayers when all of the following criteria are met:

  • all parties to the transaction choose to apply the roll-over
  • there is no change to the ultimate economic ownership
  • the transfer is part of a genuine restructure
  • assets transferred are eligible assets
  • all parties meet the residency requirement.

This roll-over is in addition to existing roll-overs for assets transferred in the course of carrying on a business. The roll-over is not available to an exempt entity or a complying superannuation fund.

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