SME demergers, capital returns & the small business restructure rollover – 2018 Private Business Tax Retreat

The ATO interpretation of the demerger rules has effectively put them beyond the reach of the vast majority of SME companies.

The small business restructure rollover, designed to allow small businesses to transfer active assets from one entity to one or more other entities without incurring an income tax liability, is seen by some as an alternative means of achieving a similar outcome.

Additionally, some advisers see the rollover as offering a more flexible option than provided for by Div 16K when undertaking other share capital dealings.

At the 2018 Private Business Tax Retreat, John Middleton CTA and Christine Palmer (both of Clayton Utz), will present the session ‘SME demergers and capital returns – is the small business restructure rollover the answer?’ 

John Middleton CTA

Here John tells us a little about some of the issues they will cover.

“Christine and I are going to highlight some of the potential pitfalls of demerger relief for SMEs, and look at whether the small business rollover offers a useful alternative to get to the desired result.

“It’s important to note that demerger relief is not just Div 125 - it’s a lot harder than that! Jumping through the 45B and demerger dividend hoops can be tough, and it remains to be seen whether the ATO applies Div 328 in a similarly restrictive fashion.”

John and Christine will look at how demerger relief can actually be considered three concessions in one, asking when SMEs can satisfy the ATO tests, and whether or not the new Small Business Restructure Rollover allows an effective tax-free demerger. While considering when the safe harbours apply, they will also discuss issues related to buybacks and other capital transactions.

John said: “Our hope is that delegates come away knowing more about the tricks and traps of SME share capital transactions, and the scope and potential limits of the small business rollover, taking some new ideas back to their practice – as well as knowing which bits of the ITAA are marked ‘here be dragons’.”

Joining the Institute in 1998, John has been a keen attendee of seminars for more than two decades. He has served on various committees for The Tax Institute for around ten years, including the Organising Committee for the 2018 Private Business Tax Retreat, and has taught the Chartered Tax Adviser program in Brisbane.

“I've been in tax over 20 years now, beginning with an SME focus, which remains an important part of my practice. I'm a 'specialist generalist' – that means I do everything from stamp duty, CGT, GST, income tax, through to things like Payroll Tax and FBT from time to time. As well as that, negotiating and documenting commercial transaction and restructures keeps me "out in the paddock" of SME practice.

Asked what else he’s looking forward to at the Retreat, John said “The retreat dinner is always fantastic, but Mark Molesworth’s Session on Division 7A should be a real highlight.”

This year’s program also covers trusts, Part IVA, corporate and commercial issues, superannuation and estate planning, and offers perspectives from the ATO. You can view the full program on our website

Join us for the 2018 Private Business Tax Retreat on 31 May – 1 June at the Palazzo Versace Hotel on the Gold Coast.


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