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Changing your business structure

There are steps involved if you change your business structure.  For example, when you:

  • Change the composition of your business partnership because your previous partner has retired or passed away or a new partner is admitted.
  • Change your entity type because the business has been restructured.
  • Incorporate your business.


A demerger is a form of restructure.  Investors, for example, shareholders or unit holders, gain ownership in an entity that they formally owned indirectly (the ‘demerged entity’).  There is no change to the underlying ownership of the companies or trusts that formed part of the group.  The company or trust that no longer owns the entity is known as the ‘demerging entity’.

You may not be eligible for tax relief under the demerger provisions if either the:

  • Demerger is not undertaken for the substantive business reasons.
  • Capital and profit elements of the demerger allocation do not reflect the circumstances of the demerger.

Sole trader

If you are a sole trader and you are closing one business to open another business as a sole trader, then your ABN does not need to be cancelled.  You must notify the ATO, and the Australian Business Register (ABR) within 28 days.

You may need to cancel registrations such as GST, LCT or fuel tax credits if they are no longer applicable to your business.

If you do cancel your ABN and later commence a new business as a sole trader, you can reapply online, and the same ABN will be registered.


If a company is not going to lodge tax returns in future years, then ‘FINAL’ should be printed on the company tax return.

Once a company is deregistered with the Australian Securities & Investments Commission (ASIC), it ceases to exist, and you can no longer lodge any forms with the ATO.  Any forms lodged for a deregistered company will be cancelled and not processed.


If your partnership has stopped trading and the assets have been distributed during the year, then you should indicate on the tax return that it is a ‘FINAL’ return.


If a trust is would up during the year and all the trust’s assets have been distributed, then you should indicate on the tax return that it is a ‘FINAL’ return.

Any proceeds you received from the sale of your business should be shown on your individual tax return.

For more information, see Changing your business structure | Australian Taxation Office ( or contact or office on 03 9848 5933 and speak to one of our accountants.


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