Step-by-Step Guide to the Small Business Restructure (SBR) Process

Introduction

The Small Business Restructure (SBR) process is a formal, ATO-endorsed way for eligible small businesses to manage unpayable tax debt without shutting down or going through traditional insolvency methods like liquidation or voluntary administration.

If your company is burdened with tax debt and still fundamentally viable, this guide will walk you through the step-by-step process of how an SBR works — and how it may offer a path to debt reduction, creditor cooperation, and business survival.

What Is a Small Business Restructure?

The SBR framework was introduced in January 2021 under the Corporations Amendment (Corporate Insolvency Reforms) Act 2020 (Cth). It's designed to help Pty Ltd companies with liabilities under $1 million work with a licensed Small Business Restructuring Practitioner (SBRP) to propose a repayment plan to creditors — including the ATO.

Unlike other insolvency processes, directors stay in control of the company during the SBR.

Eligibility Criteria

To access the SBR process, the company must:

1. Be a Pty Ltd company

2. Have total liabilities under $1 million

3. Be insolvent or likely to become insolvent

4. Have lodged all tax returns and BAS with the ATO

5. Not have used an SBR in the past 7 years

6. Appoint a registered Small Business Restructuring Practitioner

Source: ASIC - Restructuring and the Restructuring Plan

Step-by-Step SBR Process

Here is a clear breakdown of how the Small Business Restructure unfolds:

Step 1: Assess Eligibility

• Your accountant or a registered insolvency expert will review:

  • Total debts (ATO, suppliers, super, etc.)

  • BAS/tax lodgements

  • Solvency status

• If the company meets the SBR conditions, you can proceed.

Step 2: Appoint a Small Business Restructuring Practitioner (SBRP)

• The company officially appoints an SBRP in writing (Form 505).

• This is then lodged with ASIC and notified to creditors.

• A 20-business-day period begins to prepare a formal restructuring plan.

Step 3: Create a Restructuring Plan

• The SBRP works with directors to draft a plan that includes:

  • How much creditors will receive (usually 5–40 cents on the dollar)

  • How and when payments will be made (typically over 3–36 months)

• The company continues to trade under director control.

Step 4: Plan Proposal Sent to Creditors

• The proposed plan is distributed to all unsecured creditors, including the ATO.

• Creditors have 15 business days to vote.

Step 5: Creditor Vote

• The plan needs 50% in value of creditors (by dollar amount) to vote YES.

• If approved, the plan becomes binding on all unsecured creditors.

• If rejected, the company may pursue liquidation or voluntary administration.

Step 6: Plan Implementation

• Once accepted, the company begins making agreed payments.

• The SBRP oversees compliance with the terms of the plan.

• If completed, remaining debts in the plan are extinguished — a legal clean slate.

What Debts Can Be Included?

The plan typically includes:

• ATO tax debt (GST, PAYG, income tax)

• Unsecured trade creditors

• Outstanding superannuation

• Employee entitlements

⚠️ Secured debts (like business loans or leases) and related-party creditors are excluded.

Key Benefits of an SBR

• ✅ ATO and trade debt often reduced significantly

• ✅ Directors remain in control (not replaced by an administrator)

• ✅ Fast and cost-effective process (vs. voluntary administration)

• ✅ Avoids business shutdown or liquidation

• ✅ Preserves reputation, clients, and cash flow

When to Consider SBR

You should consider the SBR process if your company:

• Has ATO debt over $50,000

• Is receiving Director Penalty Notices (DPNs)

• Is on a payment plan but still struggling

• Is falling behind on super, PAYG or GST

• Is otherwise viable with regular income

Next Steps

Before proceeding, consult a registered Small Business Restructuring Practitioner (SBRP) to determine if you qualify and get started with a plan that’s right for your situation.

References

1. Australian Securities and Investments Commission (ASIC) – Restructuring and the Restructuring Plan

2. Corporations Amendment (Corporate Insolvency Reforms) Act 2020 (Cth)

3. Australian Restructuring Insolvency and Turnaround Association (ARITA) – Small Business Restructuring

4. Australian Taxation Office (ATO) – Paying Tax Debts