Small Business Restructuring (SBR): A Quick ATO Debt Restructuring Guide
Your lifeline to reducing ATO debts while keeping your small business trading
Introduction
When your company is struggling with ATO debt, a Small Business Restructure could be the solution your company needs.
Introduced by the Australian government in 2021, this restructuring process has helped many small businesses reduce their tax debt, avoid liquidation, and continue to trade.
As specialists in Small Business Restructuring, we've guided company directors through the process of reducing ATO debt by up to 70%, while maintaining their existing business relationships, arrangements with creditors, and continuing operations.
What is Small Business Restructuring (SBR) and why was it created?
Small Business Restructuring represents a significant shift in how Australia helps struggling businesses recover. SBR was designed to help viable companies survive and thrive, unlike traditional insolvency solutions that often lead to business closure or administration.
Created in response to the economic challenges of COVID-19, this solution recognises that many good businesses can face temporary setbacks without being fundamentally broken.
The process allows you to (we do it on your behalf) negotiate with creditors while keeping your company doors open. Think of it as a business hospital rather than a business morgue – it's about recovery, not closure.
Most importantly, owners stay in control of their small businesses throughout the process, unlike other insolvency solutions where they hand over control to an administrator.
Read more: Small Business Restructuring vs Liquidation: Which path is right for your company?
ATO debt got out of hand? Let's talk.
The life-changing benefits of choosing an SBR
When directors learn about what SBR can achieve, many wish they'd known about it sooner.
Beyond the headline benefit of debts reduction, Small Business Restructuring offers several advantages that can transform your company's future.
The most immediate personal benefit to business owners is that all enforcement action stops as soon as you appoint a restructuring practitioner. This means no more threatening letters, no garnishee notices, and protection from Director Penalty Notices (DPNs).
Your employees won't lose their jobs, creditors and suppliers can keep doing business with you, and most importantly, you maintain control of your company's operations.
The debts that have been keeping you awake at night can typically be reduced by around 70%, with the remaining balance structured into an achievable payment plan that matches your cash flow, typically over two years (can be up to three years).
Read more: Why a Small Business Restructure could be your company's lifeline
Could your company qualify for an SBR?
The eligibility criteria for Small Business Restructuring were deliberately designed to be straightforward:
Your company needs to have less than $1 million in total liabilities, including tax debts, trade creditors, superannuation contributions, and other tax obligations.
You'll need to be operating as a Pty Ltd company, and
Your tax lodgements should be either up to date or able to be brought up to date quickly.
One common misconception is that your business needs to be failing to qualify. Actually, the opposite is true – SBRs are designed for businesses that are viable but struggling with creditors and historical taxation debt.
If your company is profitable at its core but burdened by ATO debt, you're likely an ideal candidate.
Read more: Small Business Restructuring eligibility: A simple guide to qualifying
Your step-by-step guide to the SBR process
Understanding how SBR works helps remove the mystery and anxiety around the small business restructuring process for directors.
It begins with appointing a Small Business Restructuring Practitioner (like us), which immediately stops ATO enforcement action.
You then have 20 business days to work with your practitioner to develop a tax restructuring plan. During this time, your business and employees continue operating normally.
The plan typically proposes paying a percentage of your debt (e.g. 30% of it) over a period of up to three years, with the remaining amount forgiven.
Creditors then have 15 business days to vote on your proposal.
The entire formal process takes just 35 business days, making it much faster than traditional insolvency solutions.
Read more: The small business restructuring process explained: Your week-by-week breakdown of a restructuring plan
Real results: How much ATO debt can you reduce?
While every case is different, our clients typically achieve around 70% reduction in their ATO debt through Small Business Restructuring.
For example, a recent client reduced their $400,000 tax debt to $120,000, with the remaining amount structured into an affordable monthly payment plan.
These aren't just numbers – they represent real Australian businesses that have successfully used SBR resources to get back on track.
The amount of debt reduction possible depends on several factors, including:
your company's trading history,
current profitability, and
ability to make future payments.
What's crucial is that the reduction must be better than what creditors would receive in a liquidation scenario.
Read more: SBR debt reduction: What's possible for your company?
Act sooner, and you'll have more options available.
Working with your Small Business Restructuring Practitioner
Your SBR Practitioner plays a crucial role in achieving a successful outcome, but their role is different from traditional insolvency practitioners.
Rather than taking control of your business and assets, a practitioner acts more as a professional negotiator. They'll help develop your restructuring plan, work with the ATO on your behalf, and ensure all legal requirements are met.
What many directors appreciate is that the restructuring practitioner works alongside you, not above you. You keep running your business while they focus on a restructuring plan for your debt.
A practitioner also helps you understand your options clearly, ensuring directors can make informed decisions about their company's future.
Read more: Understanding your SBR Practitioner's role: What to expect and how they help
Understanding SBR costs and comparing options
The cost of Small Business Restructuring typically ranges from $15,000 to $25,000, depending on your company's complexity.
While this might seem significant, it's important to consider it against the amount of debt typically reduced.
For instance, if your company has $300,000 in ATO debt and achieves a 70% reduction, that's $210,000 saved – making the cost of SBR a smart investment.
These costs are also considerably lower than traditional insolvency solutions like voluntary administration, which can cost upwards of $50,000.
Plus, a restructuring practitioner can structure payment arrangements for their fees, making the process more accessible when cash flow is tight.
Read more: SBR costs explained: Understanding fees and return on investment
99% success rate
In the 2024 financial year, Business Reset had 111 of 112 SBR Proposals accepted by the ATO.
That's higher than a 99% success rate we achieved for our SBR clients.
They key to this industry-leading success rate? Simple.
We do all the hard work up front (before you pay a cent) so we're confident that your SBR will be accepted BEFORE we even invite you to engage us.
How SBR affects your business relationships
One of the most common concerns directors have is how SBR will affect their relationships with employees, suppliers, and customers.
The good news is that Small Business Restructuring is designed to be minimally disruptive. Your employees' entitlements and jobs are protected, and in most cases, your suppliers won't even need to know you're going through the process unless they're owed money.
This confidential approach means you can often restructure your ATO debt without impacting your business reputation or day-to-day operations.
Your customers continue receiving the same service, and your team keeps working as usual – just without the stress of overwhelming tax debt hanging over the business.
Read more: Managing relationships during SBR: How to minimise disruption
Your role and responsibilities during an SBR
As a director, you maintain significant control during Small Business Restructuring – a key difference from other insolvency solutions.
Your primary responsibilities include continuing to run the business effectively, maintaining accurate records, and working cooperatively with your restructuring practitioner.
You'll need to provide accurate financial information and assist in developing the restructuring plan. Think of it as a partnership: you focus on running the business successfully while your practitioner handles the debt restructuring.
This approach ensures your business can demonstrate its viability while addressing its challenges.
Read more: Director's guide to SBR: Understanding your role and responsibilities
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Success stories: Companies that thrived after SBR
The true measure of Small Business Restructuring's effectiveness lies in the stories of companies that have used it successfully.
Take Sarah's manufacturing business, for example. With $380,000 in ATO debt threatening to force closure, SBR reduced this to $114,000 and created a manageable payment plan. Two years later, her business is thriving, employing more people than ever.
Or consider Mark's construction company, which turned a $220,000 tax debt into a $66,000 structured payment plan. His business continued operating throughout the process, and most clients never knew about the restructure.
Read more: Real SBR success stories: How Australian businesses bounced back
Ready to explore Small Business Restructuring?
Take the first step towards reducing your ATO debt and securing your business's future.
Our experienced team can help you understand your options and determine if SBR is right for your situation.
The initial consultation is free and completely confidential.
Read more: Navigating SBR challenges: Solutions to common concerns
Let's have that initial chat. It's free.
You've got the answers, now it's time to act.
