Who Qualifies for a Small Business Restructure?
Small Business Restructure (SBR) is a formal debt relief process designed to help viable companies manage and reduce their tax and other unsecured debts without giving up control of their business. Introduced in January 2021, SBR was created to support small businesses impacted by financial distress — especially following COVID-19.
But not all companies are eligible for this process. In this article, we’ll break down exactly who qualifies for a Small Business Restructure and what requirements must be met.
✅ SBR Eligibility Criteria
To be eligible for an SBR, your business must meet all of the following requirements:
1. Be a Registered Pty Ltd Company
Only companies registered as Australian Proprietary Limited (Pty Ltd) are eligible. Sole traders, partnerships, and trusts (without a corporate trustee) are not eligible.
2. Total Liabilities Must Be Under $1 Million
This includes all secured and unsecured liabilities (such as ATO debts, supplier debts, loans, etc.). If your business owes more than $1 million in total, you will not qualify for this process.
💡 Tip: GST and PAYG debts from the ATO are commonly included in SBR proposals.
3. Be Insolvent or Likely to Become Insolvent
The business must either:
Currently be unable to pay its debts when they fall due, or
Be reasonably likely to become insolvent in the near future
This is a key requirement under the Corporations Act 2001.
4. All Tax Lodgments Must Be Up to Date
Even if you owe money to the ATO, you must have lodged:
All Business Activity Statements (BAS)
Income tax returns
PAYG and superannuation forms
Lodgment must be complete, even if payments are overdue.
5. Director Must Not Have Used SBR in the Past 7 Years
If the current company director (or any director of related entities) has previously used an SBR or simplified liquidation within the last 7 years, they cannot use the process again during that time period.
6. Appoint a Registered Small Business Restructuring Practitioner
A business must engage a registered SBR Practitioner, licensed by ASIC, to oversee the restructure. The practitioner will:
Assess the company’s financial position
Help develop a restructuring plan
Submit the plan to creditors for approval
What If You Don’t Meet the Criteria?
If your business doesn’t qualify for a Small Business Restructure, other formal insolvency options may include:
Voluntary Administration
Creditors’ Voluntary Liquidation
Informal ATO payment arrangements
An insolvency specialist can help assess the best solution based on your business situation.
Summary
The SBR process is ideal for companies with manageable debt levels and a strong chance of survival. It gives directors the ability to deal with financial distress without losing control of the business — unlike liquidation or administration.
If your business:
Is a Pty Ltd entity
Has liabilities under $1 million
Has up-to-date lodgments
Is struggling with ATO or creditor pressure
…then you may qualify for a Small Business Restructure and reduce your debts by up to 70% in some cases.
Need Help?
If you're unsure about eligibility or want to explore the SBR process for your company, reach out to a licensed restructuring adviser or insolvency firm for a free consultation.
References
ASIC — Restructuring and the restructuring plan:
https://asic.gov.au/regulatory-resources/insolvency/insolvency-for-directors/restructuring-and-the-restructuring-planAustralian Government Treasury — Insolvency Reforms for Small Business:
https://treasury.gov.au/consultation/c2020-121588ATO — Dealing with tax debt for businesses:
https://www.ato.gov.au/Business/Business-activity-statements-(BAS)/In-detail/Paying-your-BAS/
