It Depends – Can I access small business duty relief in Queensland in relation to the restructure of my business?

In this edition of ‘It depends’, senior associate Keeghan Silcock talks about whether you might be eligible for small business duty relief in Queensland.

VIDEO TRANSCRIPT

Hi, welcome to another edition of It Depends. Today, I’ll be talking about whether you might be eligible for small business duty relief in Queensland.

What is the structure of the current business owner?

It depends. In September 2020 The Office of State Revenue in Queensland announced small business duty relief for particular restructures of small businesses. There are a number of requirements that must be satisfied in order to get the benefit of that relief. The first is what structure are you using currently to operate your business as the exemption only applies where you’re operating using either a discretionary trust, a partnership or as a sole trader. Importantly, the relief is not available where your existing business entity is a unit trust.

What is the structure of the new business owner?

The second important requirement is that it must be a restructure from your existing entity to a new company. And that new company either has to be new so completely established from scratch, or an existing company that it has been entirely dormant since its incorporation. The new company also needs to be set up so that its shares are held by either the sole trader that’s currently operating the business, the discretionary trust that’s currently operating the business or the takers in default of that discretionary trust, or the partners in the existing partnership that are operating the business.

What other requirements need to be satisfied?

Some of the other key requirements to gaining the benefit of this exemption include the following. Number one, the assets that are being transferred have to be actively used in the business. This means they can’t be passive assets, such as potentially a family home or something else, which isn’t solely and exclusively used in running that business. Number two, the dutiable value of those assets have to be ten million dollars or less. Also, the annual turnover of the business has to be five million dollars or less. The other important requirement is that the entity which we’re looking to restructure has to have its business conducted from Queensland or has to be in the business of providing goods or services to Queensland customers so that you get that requisite Queensland connection to gain a benefit of this exemption.

Further information about business restructuring

If you have any clients who are looking to do a restructure their business from a sole trader, discretionary trust, or partnership to a new company, please feel free to get in touch with a member of our team and we can walk you through the requirements that would need to be satisfied in order to get the benefit of this duty exemption.