What was broken
A family-owned manufacturing group had expanded into multiple businesses over two decades without a formal corporate structure. Different family members managed separate operations, but assets, liabilities, and ownership interests had become intertwined across several entities. Banks, auditors, and prospective investors found the structure increasingly difficult to evaluate.
What we did
CapEasy conducted a comprehensive review of the group's legal entities, operational divisions, and ownership arrangements. We designed a simplified corporate structure, reorganized business activities under appropriate entities, updated governance documentation, and coordinated tax-efficient implementation while maintaining business continuity.
Where it landed
The manufacturing group transitioned to a significantly cleaner corporate structure, improving operational transparency, banking relationships, and long-term succession planning while reducing administrative complexity.
Every entity gets a register, and the register has to agree with the ledger
The pattern in this engagement — separate operations, each run informally by a different family member, with assets and liabilities crossing entity lines nobody had mapped — is the exact shape an Australian family group grows into after a decade or two of adding a trust here, a company there, a related entity for the new site. ASIC's obligation runs the other way: every company must keep its own register of members, officeholders and share structure current, and it has to reconcile with what the books show actually happened. When a bank renews a facility or an accountant is asked to sign off on a group's financials, the first thing checked is whether the ASIC-facing register and the internal ledger tell the same story.
The fix in a family group is the same mapping exercise CapEasy ran here: list every entity, confirm what it actually owns and owes, and correct the register before the reconciliation, not after. ASIC's own guidance on keeping company details current is the reference point for what has to be lodged and kept in step whenever shares, members or structure change.
Intercompany loans between family entities are a Division 7A problem, not a bookkeeping footnote
The engagement found assets and liabilities intertwined across entities with no formal record of who owed what to whom — in Australia that same pattern lands squarely on Division 7A of the Income Tax Assessment Act 1936. Money moving between a private company in the group and a related trust, another entity, or a family member without a complying loan agreement, minimum interest and a fixed repayment term is at risk of being treated as an unfranked dividend to the borrower, taxed in full, in the year the ATO reviews it — years after the money moved, with no cash left to fund the tax.
A group untangling its structure has to schedule every intercompany balance the same way CapEasy scheduled the manufacturing group's cross-entity assets and liabilities: one line per loan, the entities on each side, the date, the amount, and whether a complying agreement sits behind it. That schedule is what a family group's registered tax agent needs in hand before lodgment — it is the difference between a clean group structure and a deemed-dividend assessment landing on the entity least able to absorb it.
A rollover exists for exactly this — but it doesn't excuse skipping the paperwork
Restructuring a group of related small businesses in Australia can often be done without triggering an immediate capital gains or income tax bill on the assets moved between entities, using the small business restructure rollover in Subdivision 328-G of the Income Tax Assessment Act 1997 — provided the entities are genuinely related small business entities and the restructure does not materially change who has the ultimate economic ownership of the assets. It is relief for moving assets into a cleaner structure, not a substitute for the structure being clean: the rollover still requires the same asset-by-asset ledger CapEasy built for the manufacturing group, because a tax agent cannot claim relief on an asset nobody can confirm was actually owned by the entity transferring it.
Where a restructure does give a related party a financial benefit outside the ordinary run of business — a related entity absorbing a debt, or an asset moving at other than arm's length — Chapter 2E of the Corporations Act 2001 requires member approval before the benefit is given, unless an arm's-length or closely-held-subsidiary exception applies. That approval step, and the explanatory statement behind it, is exactly the kind of governance documentation CapEasy updated in this engagement — reorganising activities under the right entity is only half the job; recording the authority for having done so is the other half.
What to take from it
- A family group's real structure is whatever the entity registers and the intercompany ledger actually show — not what the family agreed verbally who runs what.
- Every dollar that moves between related entities without a complying loan agreement is a Division 7A exposure sitting quietly until an ATO review finds it.
- Subdivision 328-G can move assets between related small business entities without an immediate tax bill, but only onto a ledger that already reconciles.
- Financial benefits to related parties outside arm's-length terms need member approval under Corporations Act Chapter 2E before the benefit moves, not after.
- Untangling a group is a mapping exercise first — every entity, every balance, every approval — and only then a filing exercise.