Pre-sale tax structuring: what to fix 12–24 months before selling

24 months: map the business and its owners

Record companies, trusts, partnerships, shareholders, beneficiaries and control relationships. Identify who owns goodwill, equipment, IP and premises, and who employs staff. Locate deeds, amendments, share records and loan agreements. Establish ownership periods and the history of business use; neither can safely be reconstructed from a recent balance sheet alone.

Map connected entities and affiliates for the relevant tax tests. Estimate aggregated turnover and net asset values using realistic values, including assets outside the trading entity that the legislation brings into account. Obtain a preliminary view on the active-asset and significant-individual tests.

12 months: compare structures and identify obstacles

Model an asset sale and a share sale, including the buyer’s likely preference. Check passive investments, surplus cash, related-party balances and property held outside the business. For a share sale, examine the underlying asset mix and the additional tests in section 152-10. Cash required in the business and passive cash do not necessarily receive the same treatment.

Review Division 7A loans and unpaid present entitlements on their actual legal terms and current authority. Do not assume a journal entry or pre-sale dividend will resolve every exposure. Consider lender consents, distributable cash and the tax cost of extracting assets or money.

A restructure may assist a continuing business, but the Small Business Restructure Roll-over is not a general tax-free route to an imminent sale. Subdivision 328-G requires a genuine restructure of an ongoing business, qualifying entities and assets, continuity of ultimate economic ownership subject to specific rules, and other conditions. Its three-year safe harbour has conditions; failing the safe harbour does not itself determine the wider statutory test. State duty is a separate question.

6 months: build an evidence-backed sale file

Reconcile tax cost bases, ownership records and valuations. Identify any proposed rollover, concession choices and retirement-exemption payment or super requirements. Confirm which assets stay with the seller and document any lease or licence the buyer will need.

Check that the business can deliver what a going-concern clause promises. The GST treatment depends on the statutory conditions and what is actually supplied and operated up to the relevant date, not merely the heading in the agreement. Work through NSW duty where land or landholder interests are involved.

3 months: prepare the transaction positions

Prepare a supported price allocation and a list of tax warranties, indemnities and disclosure exceptions. Agree a process for information exchange and handling future tax claims. Review employee entitlements, lease assignment, restraints and releases of personal guarantees.

For an earnout, identify the performance measure, calculation period, access to accounts and dispute mechanism. Ask whether look-through tax treatment applies rather than assuming every deferred payment qualifies. Model the cost of a buyer reducing the price in exchange for taking less historic risk.

Heads of agreement and contract

Obtain advice before signing heads of agreement: some terms may bind even if the document is described as preliminary. For CGT event A1, a disposal under contract is generally timed at contract entry, not completion. A condition delaying performance does not necessarily delay contract formation. Do not backdate documents or rely on a settlement extension to select a tax year.

Give the lawyer and accountant the same final structure and timetable. Set a completion checklist for price allocation, loan settlement, GST terms, concession choices, stakeholder payments and return responsibilities. Reserve records and access rights needed for later assessments.

Who does what?

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Reform watch: separate law from proposals

For a sale crossing 1 July 2027, revisit the CGT calculation and transition evidence. The announced 30% minimum tax on discretionary trusts from 1 July 2028 is a separate policy measure; the ATO material checked for this guide describes it as not yet law. Treat it as a planning scenario, not a current liability or reason to restructure automatically.

Mistakes to avoid

• Testing concessions only after agreeing a binding price and structure.
• Moving property without costing duty, CGT, finance and assignment consequences.
• Assuming an asset-sale concession solves the later distribution of company proceeds.
• Letting an adviser assume another adviser will make the choice or payment.
• Using tax savings to justify a commercially poor sale.

Official sources

• Income Tax Assessment Act 1997 — Divisions 104, 115 and 152
• Treasury Laws Amendment (Tax Reform No. 1) Act 2026
• ATO — Discretionary trust minimum-tax proposal