The Small Business Restructure Rollover under Subdivision 328-G lets a genuine restructure happen without triggering CGT. It resets the 15-year exemption clock on newly issued shares, but the company inherits the original owner's holding period on the underlying business assets. So a later share sale fails the 15-year test while an asset sale can still qualify.
For Australian small business owners approaching retirement, the Small Business Restructure Rollover (SBRR) under Subdivision 328-G of the Income Tax Assessment Act 1997 is a useful — but frequently misunderstood — pre-retirement planning provision. Introduced from 1 July 2016, the SBRR lets a small business be transferred between entity types — sole trader to company, trust to company, partnership to trust, and other combinations — without triggering CGT or other immediate tax (ATO — small business restructure roll-over, https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/income-and-deductions-for-business/concessions-offsets-and-rebates/small-business-restructure-roll-over, accessed 25 May 2026). It matters for retirees because the structure a business sits in at the time of sale shapes whether the small business CGT concessions in Division 152 (the 15-year exemption, the retirement exemption, the 50% active asset reduction) deliver their full value. But it is just as important to understand what the SBRR does not do — because a restructure undertaken with the wrong expectation can actually forfeit a concession the owner already had.
The structure-specific impact on concession access is the real driver of SBRR planning, and the holding-period mechanics need to be understood precisely. The 15-year exemption (Subdivision 152-B) requires the CGT asset disposed of to have been owned continuously for at least 15 years. For a share sale, the relevant asset is the shares, and the ownership clock runs from when the shares were acquired — not from when the underlying business began. So an owner who ran a business as a sole trader for 14 years and then restructured into a company eight years ago has owned the shares for only eight years and would fail the 15-year test on a share sale, despite 22 years in the underlying business. This is the trap, and it cuts the opposite way to how the SBRR is often pitched: rolling a business into a company starts a fresh 15-year clock on the new shares. The SBRR does not extend a share-ownership period.
What the SBRR does preserve is the ownership history of the transferred assets themselves. For the purpose of the 15-year exemption, the transferee is taken to have acquired a transferred asset when the transferor acquired it (ATO Law Companion Ruling LCR 2016/2, https://www.ato.gov.au/law/view/document?DocID=COG/LCG20162/NAT/ATO/00001, accessed 25 May 2026). So if the company later sells the underlying business assets (premises, goodwill, plant), it can count the original owner's holding period toward the 15 years. The transferee also inherits the transferor's cost base, and pre-CGT status of pre-1985 assets is preserved. The crucial distinction is this: holding-period continuity flows to the assets the new entity holds — useful for a future asset sale by that entity — but it does not flow to the shares or units a person holds in the new entity. That difference decides whether a pre-retirement restructure helps or hurts.
Put plainly: a restructure only costs you the 15-year exemption if you then restrict your exit to a share sale. The two exit routes are worth setting side by side, because they produce opposite answers from the same restructure:
| Exit method | 15-year clock | 15-year exemption available? |
|---|---|---|
| Selling the company shares | Resets to the date the shares were issued | No — unless the shares are then held for a further 15 years |
| Selling the underlying business assets | Preserved from the original sole trader's acquisition date | Yes — the company inherits the rollover history, provided the other conditions (including the significant individual's retirement) are met |
So the exemption is not destroyed at the business level by the restructure itself. It is the choice of exit years later that determines whether the preserved history can be used. Planning an asset sale keeps the original timeline intact; locking yourself into a share sale is what forfeits it. That said, an asset sale by the company leaves the proceeds inside the company, and getting them out to the individual is a separate problem with its own tax consequences — so the asset-sale route is not automatically the better answer, only the one that keeps the exemption on the table.
The basic conditions for the rollover are specific. The transferor must be a small business entity — broadly, aggregated annual turnover under $10M — or a partner in, or an affiliate or connected entity of, such a business; the transferee must be or become an eligible entity; the transfer must be part of a genuine restructure of an ongoing business rather than a sale, wind-down or a scheme to access concessions; the ultimate economic ownership of the assets must be maintained (the same individuals owning the assets in the same proportions before and after); both parties must generally be Australian residents; and both must choose to apply the rollover. The "genuine restructure" test is governed by ATO Law Companion Ruling LCR 2016/3 (https://www.ato.gov.au/law/view/document?DocID=COG/LCG20163/NAT/ATO/00001, accessed 25 May 2026) and is the most fact-dependent element — the ATO looks for a commercial rationale beyond tax, continuing business activity, and operational substance. A restructure six months before a planned sale, with no operational change, is at high risk of failing; one done years earlier alongside genuine business evolution is far more defensible.
The ultimate economic ownership test is the gate that decides which restructures are possible. The same individuals must economically own the assets after the restructure as before. A sole trader becoming sole shareholder of a company passes easily; partners becoming shareholders in their partnership proportions passes; but a discretionary trust is more nuanced, because no specific beneficiary "owns" its assets. For discretionary trusts the test is satisfied where the relevant individuals are members of the same family group and a family trust election is in force, so the receiving entity must align with that family group — see our article on family trust elections and the family group. The rollover itself is tax-neutral — gains and losses on the transfer of CGT assets, depreciating assets and trading stock are disregarded — and stamp duty (state-based) and GST (often the going-concern exemption) need separate, jurisdiction-specific advice.
The legitimate pre-retirement uses therefore cluster around genuine business reasons rather than manufacturing a share-sale exemption. SBRR is the right tool for succession (moving a business into a structure the next generation can buy into or hold), for operational or asset-protection restructuring, for consolidating partners into a single entity, and for preserving the asset-level holding-period continuity so a future asset sale by the receiving entity still reaches the 15-year mark. What it is not is a way to convert a sole trader who already qualifies for the 15-year exemption into a better share-sale outcome — that swap resets the share clock and adds the problem of extracting proceeds from the company. The timing message to clients is consistent: have the structure conversation in your 50s, for sound business reasons, not in your 60s as a sale-day tax manoeuvre.
Worked planning examples
These two cases show how SBRR applies in pre-retirement planning. Illustrative only — not personal advice — using FY25-26 figures.
Case 1 — Robert, 56, a sole trader who has run a successful manufacturing business for 18 years, with about $4.2M of business assets (premises, equipment, goodwill) and $4.5M turnover. He plans to sell in four to five years. The key point on these facts is that Robert already qualifies for the 15-year exemption on a straightforward sale of the business assets as a sole trader — he is over 55, has owned the assets for 18 years, and meets the basic conditions (net assets under $6M, active asset). If he restructures into a company now and then sells his shares in four to five years, his share-ownership period is only four to five years, so the 15-year exemption would not apply to that share sale — he would drop back to the retirement exemption and the 50% reduction, a materially worse result. Restructuring would, in other words, risk forfeiting the clean exemption he has. The SBRR is genuinely useful to Robert only for non-tax reasons (say, asset protection or bringing in a co-owner), and even then the cleaner exit may still be for the company to sell the assets later (where holding-period continuity preserves the 18-year history) — though that reintroduces the question of getting the proceeds out of the company. On these facts, the rational default is usually to sell the business assets as a sole trader and claim the 15-year exemption directly, contributing the proceeds to super under the CGT cap, unless a genuine business reason justifies restructuring well ahead of any sale.
Case 2 — Jenny, 62, who has run a consulting practice through a discretionary trust for 16 years, with $1.8M turnover. Her son is taking over in 18 months when she retires. Here the trust structure complicates the 15-year exemption (the significant-individual test for discretionary trusts is fact-specific), and the 18-month runway is the binding constraint. An SBRR-then-sale would be hard to defend as a genuine restructure given the obvious, imminent succession purpose — that proximity is exactly what LCR 2016/3 scrutinises. On these facts the more defensible route is generally a direct sale of the trust's business assets to a company her son establishes, with the trust claiming whatever small business CGT concessions it qualifies for and the position carefully documented — rather than dressing the succession up as a restructure. The real lesson is one of timing: 18 months is too late for SBRR-based succession structuring, which needed to be in train five or more years earlier. Specialist tax advice is essential — see also our articles on the small business CGT concessions in retirement and the 15-year exemption specifically.
For small business owners approaching retirement, the SBRR is a valuable tool — but for genuine restructuring with foresight, not as a sale-day device. The advice work is to audit the current structure early in any retirement-planning engagement, understand precisely how the holding-period rules treat a future asset sale versus a share or interest sale, restructure (where warranted) three to five or more years before any planned exit, document the genuine-restructure rationale thoroughly, take state-specific stamp duty advice, and coordinate with the broader plan including the CGT cap super contribution. Above all, recognise the trap the original pitch of this strategy often misses — and recognise its limit. Rolling a qualifying sole trader into a company and then selling shares restarts the 15-year clock and can cost the very exemption the owner set out to capture. But that is a consequence of the exit chosen, not of the restructure itself: the same company selling the underlying business assets keeps the original holding period and can still reach the exemption. The restructure narrows the exit routes that work; it does not close them.
Sources
- Australian Taxation Office (ATO) — Small business restructure roll over
- ATO Law Companion Ruling LCR 2016/3 — the genuine restructure of an ongoing business test
- ATO Law Companion Ruling LCR 2016/2 — consequences of the small business restructure roll-over
- Australian Taxation Office (ATO) — Small business 15 year exemption
- Australian Taxation Office (ATO) — Small business retirement exemption
Key takeaways
- The Small Business Restructure Rollover lets a small business change entity type (sole trader to company, trust to company, and similar) without triggering CGT.
- For the 15-year exemption on a share sale, the ownership clock runs from when the shares were acquired, not from when the underlying business started.
- The rollover preserves the original owner's holding period for the transferred assets themselves, which helps a future asset sale by the new entity, but not a future share sale by the owner.
- The transfer must be a genuine restructure of an ongoing business, not a step engineered shortly before a planned sale — the ATO scrutinises restructures done close to an exit.
- Restructuring a sole trader who already qualifies for the 15-year exemption into a company only forfeits that exemption if the eventual exit is a share sale. If the company instead sells the underlying business assets, the original holding period is preserved and the exemption remains available — though the proceeds then sit inside the company.
Frequently asked questions
Does the Small Business Restructure Rollover trigger CGT?
No. It lets a genuine restructure of an ongoing business — changing from a sole trader to a company, for example — happen without triggering CGT or other immediate tax, provided the basic conditions and the genuine restructure test are met.
If I restructure my business into a company now, does my 15-year exemption clock keep running?
It depends what you later sell. If the company eventually sells the underlying business assets, the rollover preserves the original owner's holding period for those assets. But if you personally sell your shares in the new company, the ownership clock for the 15-year exemption runs from when you acquired the shares, not from when the underlying business started — so it effectively resets.
Should I restructure my business just before selling it to reduce tax?
Generally no. The rollover requires a genuine restructure of an ongoing business, not a step taken shortly before a planned sale, and a restructure close to an exit with no real operational change is at high risk of failing that test. It can also reset your share-ownership clock for the 15-year exemption, potentially costing you an exemption you already had.
I already qualify for the 15-year exemption as a sole trader — should I still restructure before I retire?
Only if there's a genuine business reason, like succession planning or bringing in a co-owner. Restructuring purely to change how you'll eventually sell can be counterproductive, since converting to a company and then selling your shares resets the 15-year clock and can leave you with a worse tax outcome than selling the business assets directly as a sole trader.