Small business restructuring (SBR) is a formal insolvency process introduced in Australia in January 2021 under the Corporations Act 2001. It offers a structured pathway for financially distressed but viable small businesses to manage their debts while continuing operations. This process is particularly relevant for accountants advising clients with significant Australian Taxation Office (ATO) debts.
Understanding Small Business Restructuring
SBR allows eligible businesses to address their financial challenges without resorting to liquidation. Key eligibility criteria include:
- Total liabilities under $1 million.
- Up-to-date tax lodgements and employee entitlements.
- No prior use of SBR or simplified liquidation within the last seven years
The process involves appointing a Small Business Restructuring Practitioner (SBRP), who oversees the development of a restructuring plan. This plan outlines how debts will be repaid, often in installments, over a maximum period of three years.
Benefits for Accountants and Their Clients
- Debt Relief: Clients can negotiate with creditors to reduce their financial burden, including ATO debts.
- Business Continuity: Unlike liquidation, SBR allows businesses to continue trading while restructuring.
- Legal Protection: Creditors cannot take enforcement actions during the restructuring process.
- Cost-Effectiveness: SBR is more affordable and streamlined compared to voluntary administration.
Accountants play a crucial role in the SBR process, from assessing eligibility to drafting restructuring plans. Here’s how SBR can be advantageous:
Why Accountants Should Recommend SBR
For accountants, SBR is an opportunity to provide strategic advice that can save businesses from financial collapse. By guiding clients through the restructuring process, accountants can help them:
- Retain control of their business operations.
- Protect jobs and maintain customer relationships.
- Achieve a better financial outcome than liquidation.
Conclusion
Small business restructuring is a powerful tool for accountants to support their clients facing significant ATO debts. By leveraging this process—and collaborating SBR specialists: Chifley Advisory—accountants can help businesses navigate financial distress, ensuring their survival and long-term success. It’s not just about numbers; it’s about preserving livelihoods and fostering resilience in the small business community.
To find out more about SBR’s and how Chifley Advisory can help you and your clients, please book a meeting in now.
