Asset Sale or Share Sale Changes Your AML Trigger

Sell a controlling parcel of shares in a trading company and you are almost certainly providing a designated service under item 2 of table 6. Sell the same business as a bundle of assets and item 2 never opens, because nothing about the body corporate moves. Same client, same money, same handshake, two different AML answers.

I have watched firms build an entire Tranche 2 process around “business sales” as one category. That category does not exist anywhere in the Act. What exists is a list of nine services in table 6, and the deal structure decides which of them you are actually providing.

Item 2 has a threshold almost nobody quotes

AUSTRAC’s professional designated services guidance carries one sentence that decides a lot of files. Item 2 applies only where the sale, purchase or transfer relates to a controlling interest in the body corporate or legal arrangement.

Read that with a real client in front of you.

A 15% share sale in a family company sits outside item 2. A 60% sale sits inside. A 50/50 buyout where one partner takes out the other lands inside, because control ends up somewhere new.

One word carries most of that item, and I almost never see it in anyone’s checklist.

An asset sale does not move the entity

An asset sale transfers goodwill, plant, stock, contracts, sometimes property. The company keeps existing. The shares keep the same owners. Item 2 has nothing to bite on.

Two other items usually pick up the slack.

Item 1 applies where real estate forms part of the deal, and the AML definition of real estate is wider than most people assume. Fee simple, yes. Also leasehold interests running more than 30 years, and land use entitlements conferred through shares or units. A 99 year ACT lease counts. A 5 year commercial lease does not.

Item 3 applies from the moment deposit or settlement funds pass through your trust account as part of executing the transaction. Money held as payment for your own fee is carved out by s 6(5C). Money parked with you so it can move to the other side of a deal is the service itself.

Advice stays outside until a buyer has a name

AUSTRAC’s own worked example is an accountant giving tax advice on the implications of selling a body corporate. Not a designated service. No transaction exists yet, and advice that merely influences a decision does not directly advance it.

The service starts when you act on instructions and a transaction exists. AUSTRAC puts that at the point one buyer is clear and you are instructed to act, or, where several buyers are circling, when negotiations open with one or more of them.

Everything past that line is caught, including work that feels like background. Representing the client in negotiations. Drafting or reviewing the sale contract. Running due diligence and valuations in anticipation of the sale. Chasing FIRB approval or ASIC waivers. Preparing for financial settlement. Lodging transfer documents.

So the Division 152 modelling you do while nobody has made an offer sits outside, along with the aggregated turnover work that feeds it. The same modelling, done once negotiations have opened, sits inside.

From my own files: the hardest version of this is the client who has been thinking about selling for two years. You model the small business CGT concessions, you test the maximum net asset value position, you tell them which assets to move well before the event. None of that is a designated service. Then one Tuesday they forward an email from a buyer’s adviser and ask you to send the numbers across. That forward is the moment the file changes character, and it arrives with no new engagement letter, no new fee, nothing to mark it. I now keep a standing note on every business sale planning file: initial CDD is triggered by the first named counterparty, not by the first invoice.

Two clocks, and the AML one starts first

Tax measures at the CGT event. The maximum net asset value test looks at the position just before that event, and on a sale the CGT event is the contract date rather than settlement.

Initial CDD has to be complete before you begin providing the designated service, under ss 26F and 28. That point sits weeks or months earlier, when a buyer becomes identifiable and you act on instructions. What initial CDD actually requires has not changed for this, and collection is still not verification.

Your AML deadline lands first, at a moment the tax file has no date for at all. Nothing in the tax timetable will remind you it passed.

A court order stops one clock and leaves the other running

Items 1 and 2 carry an exception where the transaction is made under, or results from, an order of a court or tribunal. Family law property orders. Transfers out of a deceased estate after a court ordered grant of probate.

The exception only covers services carried out after the order exists. Work done to obtain the order is a separate question, and legal dispute resolution generally falls outside table 6 anyway because it settles questions about things that already happened.

Tax has no equivalent switch. A court ordered transfer of shares is still a CGT event, and the marriage breakdown rollover in Subdivision 126-A defers it only on its own conditions. The order turns item 2 off and does nothing at all to the bill.

What I want to see in the file

Which structure the parties settled on, in writing. Controlling share sale, minority share sale, or asset sale. Get it dated.

Who your customer is. For item 2 the customer is the person you assist. Act for the seller and the seller is your customer. Act for the buyer and it is the buyer. Acting for both is a conflict problem before it is an AML problem, and it doubles the file.

The beneficial owners of whichever entity you are dealing with, collected and verified, with the source named for each verification. A share sale that passes a controlling interest is exactly the transaction beneficial ownership rules were written for.

The date you started. Write down the day the counterparty became identifiable, because that is the date a regulator will ask about.

Records held for 7 years after the business relationship ends, under s 111. On a business sale that will usually outlast the 5 year tax record period in s 262A of the ITAA 1936 by a long way, so the two retention rules cannot share a destruction schedule.

The engagement letter is where this actually breaks

If I had to fix one thing across most firms right now, it would be the engagement letter for business sale work. Most of them describe advisory scope in careful detail and then go quiet on the moment execution begins. That silence is exactly where the CDD deadline goes missing. The same gap shows up in restructures, where item 6 turns on the creation of an entity rather than on the tax rollover you were engaged to deliver.

Firms that want the trigger date captured by process rather than memory can see how HP-KYC records the start of a designated service against the file.

Technical reference

Designated service, item 2 of table 6 to s 6(5B), Anti-Money Laundering and Counter-Terrorism Financing Act 2006: assisting a person in the planning or execution of a transaction, or otherwise acting for or on behalf of a person in a transaction, to sell, buy or otherwise transfer a body corporate or legal arrangement, where the service is provided in the course of carrying on a business and the sale, purchase or other transfer is not pursuant to, or resulting from, an order of a court or tribunal. Customer of the designated service: the person.

AUSTRAC professional designated services guidance (page last updated 16 October 2025): item 2 applies only where the sale, purchase or transfer relates to a controlling interest in the body corporate or legal arrangement. It does not matter whether the entity is a body corporate or another legal arrangement, or whether it is transferred for value.

Commencement of the service: a person commences to provide the service when they act on instructions in relation to a relevant transaction, typically when two or more parties to a transaction exist. Where one buyer is clear, the service begins when the practitioner is instructed to act. Where several potential buyers exist, it begins when negotiations open with one or more of them. Merely influencing how a customer proceeds, general advice, and ancillary services are not sufficient.

Item 1 of table 6: transactions to sell, buy or otherwise transfer real estate. Real estate covers fee simple interests, leasehold interests of more than 30 years, and land use entitlements. Excluded: leases of 30 years or less, incorporeal hereditaments, mortgagee interests, dwellings not attached to land where the resident leases the land.

Item 3 of table 6: receiving, holding, controlling or managing a person’s money or other property as part of assisting in a transaction. Exceptions in s 6(5C) include money held as payment for goods or services provided, money incidental to non designated services where no other designated service is provided, money under a court or tribunal order, and receipts or disbursements to or from a government body, court or tribunal, public international organisation, or an insurer authorised under a law of the Commonwealth, a state or a territory. Tax payments to the ATO fall within the last of these.

Body corporate: any legally incorporated entity with legal personality, including companies, incorporated associations, incorporated limited partnerships and corporations sole. Legal arrangement: express trusts, general partnerships, joint ventures, unincorporated associations and foreign equivalents. An express trust is one expressly or intentionally created in writing by a settlor, and testamentary trusts are excluded.

Initial customer due diligence: ss 26F and 28 of the AML/CTF Act 2006. Must be completed before the designated service is provided. Requires collection and verification of identity using reliable and independent data, identification and verification of beneficial owners, and assessment of ML/TF risk. Collection and verification are separate obligations. CDD reform commenced 31 March 2026.

Record keeping: s 111 of the AML/CTF Act 2006, 7 years from the end of the business relationship. Tax records: s 262A of the Income Tax Assessment Act 1936, 5 years.

Tranche 2 obligations for accountants and other professional service providers commence 1 July 2026. Enrolment with AUSTRAC is required within 28 days of first providing a designated service and no later than 29 July 2026.

Small business CGT concessions: Division 152 of the Income Tax Assessment Act 1997. CGT small business entity means aggregated turnover under $2 million. Maximum net asset value test: $6 million of net CGT assets across the taxpayer, connected entities and affiliates, measured just before the CGT event. Neither figure is indexed.

Treasury Laws Amendment (Tax Reform No. 1) Act 2026 (Act No. 49) received Royal Assent on 26 June 2026. From the income year that includes 1 July 2027 the aggregated turnover threshold for the 50% active asset reduction rises from $2 million to $10 million, s 152-205(2). The 15 year exemption, retirement exemption and rollover keep the $2 million turnover and $6 million net asset tests. The general 50% CGT discount applies to disposals up to 30 June 2027.

Marriage or relationship breakdown rollover: Subdivision 126-A of the Income Tax Assessment Act 1997.

Penalty unit: $364 from 1 July 2026, Crimes Act 1914 s 4AA.

Homepedia is an enrolled Tranche 2 reporting entity. This article is general information and is not legal or tax advice for any particular transaction. Current as at July 2026.