Understanding Business Restructures (Part 3): Tax Rollovers and Potential Reforms

Tax rollovers can be central to business restructures, but the current system can be difficult to navigate.

In the final episode of this Explain That series on Understanding Business Restructures, Andrew Henshaw is joined by Rajan Verma to discuss the practical issues with the current system of CGT rollovers and why business restructures can become complicated when multiple rollover provisions need to be considered.

Following Part 1, which introduced why businesses restructure, and Part 2, which worked through a practical case study involving Jo’s manufacturing business, this episode focuses on the tax rollover rules that may apply when a business structure is changed.

The discussion covers:

• practical issues with the current system of CGT rollovers;
• the complexity of navigating different rollover provisions;
• subdivisions 122-A and 122-B;
• subdivisions 124-M and 124-N;
• Division 615;
• the small business restructure rollover;
• why different rollover pathways can create uncertainty for business owners and advisers;
• the Board of Taxation’s proposal for a General Business Restructure Rollover;
• how a general rollover could simplify the restructuring process, especially for small businesses; and
• why proposed reforms may still come at a cost for some taxpayers.

This final episode brings together the themes from the series by looking at how the tax rules can support business restructures, where the current system creates practical difficulty, and what reform may mean for future restructures.

A practical discussion for business owners and advisers considering a business restructure, CGT rollover relief, small business restructure rollover issues or potential tax reform.

For advice on business restructures, CGT rollovers, small business restructure rollover or tax issues arising from a proposed restructure, contact Velocity Legal’s Tax team.