Business Restructure & Entity Selection
The right structure now. Instead of an expensive fix later.
Most business structures were chosen once, quickly, at the start, by someone who had no idea what the business would become.
That’s not a criticism. You can’t design a structure around a business that doesn’t exist yet. But the structure that suited a sole trader with one ute rarely suits a company with fourteen staff and a property, and almost nobody revisits it until something forces them to.
Map ownership, trading and assets before deciding whether the structure fits.
Four things
What your structure actually decides
Owners usually only think about the first one. The third is the one that costs the most when it’s wrong.
- Tax
Different entities are taxed differently, distribute differently, and give you different amounts of flexibility about who receives income and when.
- Asset protection
What sits inside the entity that trades, and what sits somewhere safer. Get this wrong and a single dispute reaches assets it should never have been able to touch.
- Capital gains treatment on exit
The expensive one. Companies cannot use the general 50% CGT discount at all — only individuals and trusts can, with complying super funds getting 33.33%. If the business you eventually sell is sitting in the wrong entity, no amount of planning at sale time recovers it.
- Succession
Whether the thing can be handed over, sold in parts, or brought into by a partner without triggering a tax event that eats the point of the transaction.
By the time something forces the question, it’s a restructure rather than a decision, and restructures cost real money.
The options
The structures, plainly
Most businesses of any size end up with a combination rather than one of these. A trading company, a trust that owns it, sometimes a separate entity holding the business or investment assets.
- Sole trader
Cheapest and simplest. No separation between you and the business, which means no asset protection and no flexibility on income. Fine when the business is genuinely you; risky once it isn’t.
- Partnership
Two or more people, shared liability, income allocated rather than taxed at the entity. Simple until something goes wrong between the partners.
- Company
Separate legal entity, limited liability, flat tax rate, and access to franking. But no CGT discount, and Division 7A rules on money you take out that isn’t a wage or a dividend.
- Discretionary trust
Flexible on distributions, useful for asset protection, eligible for the CGT discount. More administration, annual resolutions with a hard deadline, and increasing regulatory attention.
- Unit trust
Fixed entitlements to income and capital, useful where unrelated parties or different family groups invest together. Can access the CGT discount if eligible. Less flexibility than a discretionary trust, because distributions must follow ownership percentages.
- Self-managed super fund
Your own private super fund. Tax-effective, flexible on investment choices, and useful for building long-term wealth. But the trustees carry the compliance, the audits and the record keeping. Great when you want control; a burden if you don’t.
- Tax
- Asset protection
- Exit and succession
Review each structure through tax, protection and exit. This is a decision framework, not a ranking.
Worth the cost
When restructuring is worth it
Restructuring is not free, and it isn’t automatically a good idea.
It’s usually not worth it if the only driver is a marginal tax saving. Restructures have their own tax consequences, and doing one in the shadow of a sale attracts attention you don’t want.
- A sale or handover within five years
And the current entity blocks the concessions you would otherwise qualify for.
- Protected assets sitting in the trading entity
Anything that should be out of reach is currently exposed to the risk the business carries.
- The business has outgrown its structure
It has grown into a tax profile the structure was never designed for.
- A partner coming in or going out
Ownership is changing, which is the natural moment to fix the entity rather than work around it.
- A second activity that doesn’t belong with the first
Two different risks and two different buyers, currently sharing one balance sheet.
Enacted 26 June 2026 · effective 1 July 2027
The 2027 change that puts a clock on this
If a restructure was already on your list, the sequencing now matters. Doing it before or after that date produces different outcomes, and the difference is not small for businesses whose value sits in goodwill.
The 50% discount is replaced
From 1 July 2027, cost base indexation applies to individuals and trusts instead.
A 30% minimum tax arrives
Applying to capital gains made by Australian resident individuals.
A deemed disposal on 30 June 2027
Assets held on that date are treated as sold immediately before 1 July 2027 and reacquired at market value.
Small Business CGT ConcessionsWhat survives the change, and the tests your structure has to pass.
Closer to moving house
What a restructure actually involves
Owners tend to imagine it as paperwork.
Which is why the modelling comes before the decision, and why doing this under time pressure is the expensive way.
- Assets have to move
And moving them is itself a taxable event unless a rollover applies.
- Contracts and registrations get reassigned
Leases, licences and registrations may need transferring, and some of them will have clauses about that.
- Facilities and people follow
Bank facilities usually need renegotiating, and employees need transferring properly.
- Rollovers have conditions
There are rollovers designed for exactly this — the small business restructure rollover among them — but getting one wrong converts a reorganisation into a tax bill.
Division 7A
The loan account nobody meant to create
If you trade through a company and take money out that isn’t wages or a dividend, it is probably a loan. Loans from a company to its shareholders have rules, and breaching them turns the balance into a deemed dividend taxed in your hands.
It’s also one of the things that turns up in a buyer’s due diligence at the worst possible moment.
How we approach it
Outcome first. Then the modelling.
We start with where you’re going, not where you are.
Step 01
Start with where you’re going
A structure is a tool for an outcome. If nobody has asked about the outcome, the recommendation is guesswork.
Step 02
Model it
What the current structure costs you over the next five years against the alternatives, including the cost of getting from here to there.
Step 03
Sometimes leave it alone
That is a real answer and we will give it. A structure that is imperfect but functional often beats a restructure that costs $30,000 to save $8,000 a year.
Business ValuationOften needed first, because several of the tests turn on market value rather than book value.
Start with a consultation
Whether there’s a gap worth closing.
Bring your current structure and where you think the business is heading. We’ll tell you whether there’s a gap worth closing.
Book a consultation