These strategies can safeguard assets, fuel growth, and enhance investor readiness. And the best part? You can often defer capital gains tax (CGT) with a properly executed restructure.
At Standard Ledger, we regularly help founders navigate these decisions through our Tax Services and Company/Trust set up + service.
How it works
Say your operating company (OpCo) is running smoothly. You decide to introduce a HoldCo above it or spin off an IPCo to manage IP assets. By leveraging ATO rollover relief – specifically Division 615 or Subdivision 124-G of the Income Tax Assessment Act 1997 – you can exchange OpCo shares for HoldCo shares without triggering CGT.
Conditions include:
- Shareholders receive only shares (no cash or other benefits)
- Ownership remains proportionate among shareholders
- The HoldCo ends up with 100% ownership of OpCo
For IP, Division 122 allows CGT deferral when assets move into a wholly owned IPCo. You may also consider forming a tax-consolidated group, treating HoldCo and its subsidiaries as a single entity for tax purposes – making compliance simpler.
This is where valuations come in. Even if your IP is valued at nil, you’ll need defensible numbers. Our Valuations service provides the professional support required to justify asset values and demonstrate commercial purpose.
What you need to watch
The ATO takes restructures seriously. To qualify:
- Shareholders must receive whole shares, not fractions
- Obtain professional valuations (even if your IP is valued at nil)
- Have compelling commercial rationale – such as asset protection or investor readiness, not just tax avoidance
We’ve seen plenty of restructures unravel because founders relied on generic templates or accountants without startup expertise. To avoid that, explore practical insights in our guide: Doing Business in Australia: A guide for startups.
Why planning matters
An expertly executed restructure can put you in a strong position for growth or fundraising, with minimal tax disruption. But missteps can lead to cost, regulatory scrutiny, and headaches.
For example, in Understanding Transfer Pricing: What It Means for B2B SaaS Companies, we talk about how structuring decisions can have international tax flow-on effects – another reason planning matters.
If you’re also preparing for investment, check out our resource Ready, Set, Go! All You Need to Know About Raising Capital to understand how restructuring links with funding readiness.
In short
With the right advice and execution, you can restructure your startup, defer CGT, and position your business for scale or investment. Document your commercial rationale, secure defensible valuations, and execute precisely.
