Why we are seeing SBR success rates improving

By Travis Pullen, Director

Small Business Restructuring (SBR) is seeing renewed support, with success rates improving and the process becoming more consistent for practitioners and their clients.

For many businesses, SBR remains a great way to restructure and survive longer term. But proposal quality matters, and expecting a 15-cent-in-the-dollar dividend over three years is no longer the norm.

Businesses now need to come forward with better-quality proposals. At the same time, practitioners are getting better at identifying which businesses are likely to be suitable candidates before they enter the process.

Together with better and more consistent feedback from the Australian Taxation Office (ATO), this appears to be contributing to better outcomes.

Better proposals and better feedback

At a recent conference I attended in Canberra, representatives from the ATO’s small business restructure team acknowledged that the quality of practitioner reporting and the detail of information being provided had improved.

That matters because better information gives the ATO more to work with when assessing a proposed restructure. But the improvement isn’t only coming from practitioners.

Towards the end of last year, we felt the quality of feedback we received from the ATO on draft reports could sometimes be inconsistent. That’s changed.

We’re finding the feedback on draft proposals is giving us a clearer indication of where a proposal may need to land. This lets us go back to the client and their accountant with more confidence and say, “Look, if you get this up to 30 cents in the dollar over six months,” for example, “we think you’ve got a good shot at this.”

We now are seeing that the current average dividend across all SBRs that B&T Advisory has done is 30 cents per dollar.

Historically, our approval rates are around 80%. Since February, it has been 100%.

ATO Support against Appointments FYE 2025-26
Source: 2026 AIIP Conference Slide Pack

Why the draft process matters

Providing the ATO with a draft report isn’t new. For a long time, the ATO has encouraged practitioners to use the process. It does require everyone to work together.

The ATO requests at least one clear week before the final due date to review the draft and provide feedback. We then need enough time to go back to the client, make any necessary changes and get the final report out. But the statistics show that when the ATO has had a chance to review a draft and provide feedback, those SBRs are noticeably more successful than when they haven’t.

I was surprised to learn recently that some firms don’t bother with draft reports or seek feedback, including firms doing a large volume of SBRs.

Correlation doesn’t always mean causation, of course, but when the option is there, and you look at the numbers, it’s a worthwhile part of the process. Accountants are often key to making that process work. If they’re willing to work with their clients and with us to get the information through early, it gives us more time to prepare the report and start talking to the ATO.

Draft Plan Review by ATO
Source: 2026 AIIP Conference Slide Pack

What does a good SBR candidate look like now?

At its heart, a good SBR candidate is a good underlying business. It may be that a past issue is what’s led to the tax debt. The business may have done something wrong internally with its processes or made a bad business decision.

We encourage directors to be completely honest in their statements about why they believe the tax debt occurred and why they haven’t been able to pay it. But if the underlying business is solid, shedding 70 or 80 per cent of that tax debt can be the difference between a viable, thriving business going forward and one that has to close down.

There are also red flags to consider.

Two of the big ones are compliance history and director loans. The ATO wants to see that the business has made an effort with its lodgements and has made at least some attempt to pay tax. They will also look at whether the director has been taking money themselves rather than paying the company’s debts. If a business can show it’s making an honest go, then in my view an SBR is much more likely to be successful.

The earlier a business seeks advice, the better

For accountants and other trusted advisors, one key message remains: the earlier a business comes to us, the better. There are a lot of options available. It might be an SBR. It might be some form of restructure and sale of the business. It might be negotiating a payment plan with the ATO or other creditors.

Getting advice early gives the business the opportunity to assess its position and work out which option is most likely to help it move forward.

What happens after a successful SBR?

One question we don’t yet have a clear answer to is what happens to businesses several years after completing an SBR.

It’s something we’ve thought about in the office. Once we hand the company back, so to speak, it goes on its merry way. Sometimes we find out that a business completed a successful SBR and then went into liquidation a year later. It does happen. But it’s still a bit early to know how many businesses this represents.

Over the next couple of years, there should be enough time and enough matters to conduct some studies into what happens to businesses longer term.

A viable option for the right business

Overall, the ATO is supporting SBRs, but expectations have changed. Average dividend payouts are higher. The quality of proposals has improved. ATO feedback has become more consistent, and practitioners have a clearer picture of which businesses are likely to get through the process successfully.

For a business with a solid underlying operation and a legacy tax debt, SBR still remains a genuine option. The key is to get advice early, provide quality information, and put forward the right proposal.

Source: Coffee Commune September 2026  The Small Business
Restructuring Landscape, Peter Biazos