Small Business Restructuring (SBR) is designed for companies in financial distress that still have a viable future. Many business owners consider SBR when ATO debt has piled up, cash flow is stretched, and the risk of enforcement action — such as garnishee notices or a Director Penalty Notice — is getting too close for comfort.
When you enter the SBR process, your ATO debt doesn’t disappear overnight. Instead, it can become part of a formal repayment proposal to your creditors — usually at a reduced amount — that allows you to keep trading while you pay it back over time.
For most small and family businesses, GST and PAYG withholding make up the bulk of their tax debt. These are funds collected from customers and employees, but have not yet been passed on to the tax office. According to the ATO, small businesses owe $24 billion in BAS-related debt, reinforcing why it’s typically the largest creditor in restructuring plans.
Because over half of the affected creditors (by value) must agree to the proposed plan, the ATO’s vote usually determines its outcome.
Yes — under an SBR, the ATO and other creditors may compromise to accept less than the full amount owed. For example, if your business proposes a restructuring plan in which it can realistically return 20 cents in the dollar over 12 months, that may be more attractive to the ATO than forcing liquidation, where creditors might receive nothing.
The debt isn’t “wiped” per se. Instead, it is formally reduced and structured into manageable repayments, giving your business the breathing room it needs to recover.
By continuing to trade instead of shutting down, you can keep earning and work towards repaying your debt.
The ATO has recently made it clear that it won’t support plans unless businesses show good faith and compliance. Before submitting an SBR plan, you must:
Meeting these requirements shows the ATO and other creditors that the proposal is fair and transparent.
Because the ATO is usually the largest creditor, its support is critical. The ATO will generally agree to a plan if it:
On the other hand, the ATO is unlikely to support a plan that appears to unfairly advantage directors, conceals debts, or prolongs repayments without clear reasoning. In which case, the proposal may be rejected, and a voluntary administrator or liquidator may be appointed.
mySBR consults with key creditors, including the ATO, before submitting your plan to increase its chances of approval. Our proactive approach means we’ve achieved a very high success rate, with only one plan unsuccessful due to external circumstances. With careful preparation and open communication, most viable businesses can secure the ATO’s support of their company restructure.
A successful SBR plan requires accurate financial information, realistic forecasting, and careful structuring to show creditors that your business is viable.
That’s why engaging a registered Small Business Restructuring Practitioner is essential. At mySBR, we handle the technical side — from preparing financials to communicating with the ATO and other creditors — so you can stay focused on running your business.
If your business is weighed down by ATO debt, an SBR can offer a structured plan that the ATO and other creditors are more likely to accept. The key is taking early action, ensuring compliance, and receiving professional guidance.
The stress of ATO debt isn’t just about the amount owed; the uncertainty of how to save your business and the fear of losing everything you’ve built can feel equally (if not more) overwhelming.
A well-prepared SBR plan gives you clarity, reduces your debt to a manageable level, and keeps you in control of business operations.
Our small business restructuring specialists in Sydney specialise in helping businesses all over Australia to move toward a stronger future. If you’re ready to explore whether an SBR could work for you, check if your business meets the eligibility criteria or get in touch with our team today to discuss your options.
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