Partnership restructure and roll-overs

Restructure your partnership correctly and use the available rollovers.

Restructuring a partnership – whether to bring in new partners, change the capital structure, transition to a company or trust, or resolve a partner exit – is a legally and tax-technically complex exercise. Done without proper advice, a partnership restructure can trigger significant and avoidable CGT, stamp duty, and income tax liabilities. Done properly, with the available rollovers applied, the cost of the restructure can be substantially reduced.

Partnership restructure and roll-overs

ADLV Law will advise on your partnership restructure options, identify and apply the available tax rollovers – including rollovers for plant and trading stock – and manage the legal implementation to ensure the restructure achieves its commercial purpose at the lowest possible tax cost.

What is a partnership restructure rollover?

A partnership restructure rollover is a provision in the income tax law that allows assets to be transferred from a partnership to a company or other entity without triggering an immediate CGT liability. The most commonly used provisions are the Division 122 rollover, which allows a sole trader or partner to roll their business assets into a wholly owned company, and the small business restructure rollover under Subdivision 328-G, which allows eligible small businesses to restructure between entities. Specific rollovers also apply to trading stock and depreciable plant transferred in a restructure. Whether these apply depends on the specific facts of your restructure.

What is a double-shuffle in a partnership context?

A double-shuffle typically refers to a restructure in which partnership assets are first rolled into a company and then the company shares are distributed or restructured further – effectively moving the business from a partnership structure to a company structure in a tax-effective way. The term reflects the two-step nature of the transaction. Done correctly with the available rollovers, it can achieve a significant structural change at a fraction of the tax cost of a straightforward sale of assets. The precise mechanics depend on the specific assets, the partnership deed, and the intended post-restructure ownership.

What happens to trading stock in a partnership restructure?

Trading stock transferred in a partnership restructure can be either included at market value, triggering an income tax liability, or transferred under the specific trading stock rollover provisions, which allow the stock to be transferred at its tax cost base without triggering a taxable profit. The trading stock rollover is not automatic – it requires specific conditions to be met and an election to be made. Ensuring the rollover is correctly applied is an important part of the restructure analysis and is something we coordinate with your accountant.

How are departing partners' interests handled in a restructure?

A departing partner’s interest in the partnership is a CGT asset. On departure, the CGT event depends on how the interest is dealt with – whether the partner sells their interest to incoming partners, receives a distribution in kind, or has their interest bought out by the remaining partnership. The tax treatment varies accordingly, and CGT concessions may be available depending on the partner’s circumstances and the value of the interest. We advise on the appropriate mechanism for the departure and coordinate with your accountant to ensure the tax treatment is correct.

Rollovers identified and applied

Legal and tax coordinated

Commercially sound outcome

Get proper advice before your partnership restructure proceeds.

Now you understand the essentials. Let us show you exactly how we help families like yours secure their legacy.

The tax on a partnership restructure is often avoidable with the right advice.

Partnership restructures sit at the intersection of corporate law, property law, and tax law. Each asset transferred in the restructure has its own tax profile – CGT assets, trading stock, plant and equipment each have different rollover rules. Missing a rollover that was available, or triggering a taxable event that could have been deferred, can cost more than the entire cost of the restructure. Getting the sequencing wrong can have the same effect.

We will advise on the restructure options available and the commercial and legal implications of each.
We will identify the applicable CGT rollovers, including the Division 122 rollover and any partnership-specific provisions.
We will advise on the treatment of trading stock and depreciable plant under the restructure.
We will prepare all required legal documents - including the restructure agreement, new partnership deed or company constitution, and asset transfer instruments.
We will coordinate with your accountant to ensure rollover elections are made correctly and the tax treatment of the restructure is documented.

When your partnership structure needs to change but the tax exposure gives you pause

Your partnership has evolved, a partner is exiting, a new structure is needed to accommodate growth or investment, or you are looking to transition from partnership to company to better manage liability and future sale options.

You know the restructure makes commercial sense. What you want to understand before you proceed is the tax exposure and whether the available rollovers apply to your situation. You need advice that covers both the legal mechanics and the tax implications, and that is coordinated rather than siloed.

What's included in your partnership restructure service

A partnership restructure done without the available rollovers is an avoidable expense.

Partnership restructures that proceed without thorough tax analysis consistently result in unnecessary tax cost. Trading stock transferred at market value triggers income tax that a rollover could have deferred. Plant and equipment treated as sold rather than rolled triggers depreciation recapture. CGT on goodwill or land that qualified for rollover treatment is paid unnecessarily because no one checked.

These are not fringe situations – they are common outcomes when the legal and tax dimensions of a restructure are not managed in coordination. And the consequence is always borne by the partners who trusted the process was handled correctly.

From a restructure that triggers unnecessary tax to one that is properly managed

We analyse every asset in the partnership and the specific tax treatment available for each in the context of the proposed restructure. We identify the rollovers that apply, the conditions that must be met, and the sequencing that ensures those conditions are satisfied. The legal documentation is then prepared to implement the restructure in a way that is consistent with the intended tax treatment. When we are done, the restructure is legally complete and tax-effective – and your accountant has the documentation needed to report the outcome correctly.

Your partnership restructure roadmap.

From a structure that no longer works to one that does, tax-effectively.

Analysis and options

We assess your current structure, the assets held, and the commercial objective to identify the most appropriate restructure path and the available rollovers.

Advice and structure

We provide written advice on the restructure options and recommended approach, and coordinate with your accountant on the tax analysis.

Implementation

We prepare all required legal documents and manage the execution of the restructure.

Business lawyers with extensive experience in partnership restructuring and tax-effective business reorganisation.

We know that partnership restructures are often deferred because the tax exposure feels uncertain.

Our team has worked through partnership restructures of all types. Including partner exits, double-shuffles and transitions to corporate structures. We know how to identify and apply the available rollovers so the restructure can proceed at the lowest possible cost.

We understand you want to know the cost, before we get started.

We will map out our process, from beginning to end, so you know what the journey will look like before you get started.

We will provide you with a clear and detailed Work Proposal covering each step along the way.

Our fair fees are all-inclusive. No hidden costs for telephone calls, emails, photocopying, couriers, or coffee.

Our great lawyer guarantee

We want to be part of your team over the long term. We achieve this by adhering to these core principles:

Take the time

We listen carefully to understand what you want to achieve. Then we thoroughly explain our advice and step you through the documents. You can be sure you know the full consequences.

Share our knowledge

We will pass on as much knowledge as we can, so you can make your own informed decisions. We want to make you truly independent.

Stick to our knitting

We only do what we're good at. You can be confident that we know what we're doing and don't pass on the cost of our learning.

Work as one team

Someone will always be available to answer your questions, or point you in the right direction. You will also benefit from a range of perspectives and experience.

Fair pricing

For advice and documents, we provide a fixed or capped quote so you don't take price risk. If you're in a dispute, we map out the process and costs so you know what to expect.

It's your show

We're not in this for our egos. We're in it for a front row seat to witness your success.

Get proper advice before your partnership restructure proceeds.

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Partnership restructure and roll-overs

Restructure your partnership correctly and use the available rollovers.