When a Tax Restructure Becomes a Designated Service

Working out whether a client should move from a trust to a company is not a designated service. Incorporating the company is.

That is the whole boundary, and it runs straight through the middle of a job most firms treat as one continuous piece of work. The tax analysis sits on one side. The paperwork that gives effect to it sits on the other. Item 6 of table 6 catches the second half, and initial customer due diligence has to be complete before that half begins.

Which means the customer due diligence has to be done during the advice phase, on a matter that may never proceed.

Where a restructure crosses from advice into a table 6 designated service.

The test is whether you directly advance the outcome

AUSTRAC’s own framing is narrow, and it is worth quoting the shape of it rather than the words. Assistance is caught only when it directly advances the relevant outcome. Merely influencing how the client proceeds, giving general advice, or providing ancillary services is not enough.

So the accountant who models 3 structures and writes a recommendation has influenced the restructure. That is not item 6. The accountant who drafts the constitution, prepares the trust deed, or lodges the registration form with ASIC has advanced it. That is.

There is a sting in the tail. AUSTRAC treats advice that is comprehensive enough to let the client build the structure themselves, without any further professional help, as directly advancing it too. A memo that says consider a discretionary trust is advice. A memo that walks the client through settling one, step by step, is not.

The timing rule is the other half. The service begins when you act on instructions and take preparatory steps. Not at completion. Not when the invoice goes out.

What I see in practice. The restructure files I have reviewed since the reform commenced almost all have the same shape. Weeks of careful tax work: turnover tested, ultimate economic ownership traced through 2 trusts, safe harbour mapped, a memo the client signed off on. Then a company incorporated on a Tuesday afternoon in about 20 minutes, because by that stage the thinking is done and incorporation feels like typing. That Tuesday afternoon is the designated service, and the customer due diligence had to be finished before it started, not after. What makes it awkward is that the careful part and the regulated part are separated by weeks, sit in different parts of the workflow, and are usually done by different people. The partner does the structuring. Someone junior does the ASIC form. Nothing in the tax workflow tells the person filing the form that they are the one starting the clock.

Restructuring means legal form, and nothing else

Accountants use the word restructure loosely. AUSTRAC does not.

For item 6, restructuring means changing the legal form of the entity. Splitting one body corporate into several. Merging several into one. Turning a company limited by guarantee into a company limited by shares. A demerger.

What is explicitly outside it: an entity’s staffing profile, its IT systems, and small business debt restructuring under the Corporations Act 2001. The debt work may still be caught, but under item 4 as a financing transaction, not under item 6.

Now put the small business restructure rollover in Subdivision 328-G against that definition, and something uncomfortable falls out. It is an asset transfer rollover. It moves active assets from one entity to another. It does not, of itself, change anybody’s legal form.

So if the transferee already exists, and all you are doing is papering a transfer of active assets between 2 existing entities, item 6 may not be engaged at all. If the transferee has to be built first, and you build it, item 6 fires on the creation.

The AML trigger tracks whether an entity gets made or reshaped. It does not track whether the rollover is claimed. Two restructures with identical tax treatment can land on opposite sides of table 6.

Creating an entity multiplies your customers

This is the provision most firms have not read closely, and it changes the size of the job.

When the service is restructuring an entity that already exists, the customer is the person instructing you. One customer.

When the service is creating a company, the customer is that person and also the beneficial owners and directors of the company. When the service is creating an express trust, the customer is that person and also the trustee, the settlor and the beneficiaries.

Read the trust line again. The settlor. The beneficiaries.

A standard discretionary trust deed for a family restructure names a primary beneficiary and then a class radiating outward. Whoever settled the trust with the initial sum is in the customer set too, and in a lot of practices that has historically been whoever was standing nearby with $10.

How wide the class runs before it stops being workable is a live question, and it is one Norland’s review of these files keeps landing on. What is not in doubt is that the deed is now a customer identification document as well as a tax document. The general treatment of who counts sits in what is a beneficial owner.

Ultimate economic ownership is not beneficial ownership

Both phrases mean who really owns this. They are not the same test and they do not return the same names.

Ultimate economic ownership under Subdivision 328-G is an economic test about individuals who directly or indirectly own the asset. Where there is more than one, each individual’s proportionate share has to be maintained as well. It is about the flow of economic benefit, and it stops at natural persons.

Beneficial ownership under the AML/CTF regime is about ownership or control. Control is the word that does the extra work. An appointor who can remove and replace the trustee may have no ultimate economic ownership of anything and still be squarely a beneficial owner.

The practical consequence is that the ownership analysis already sitting in the restructure file, done properly, for a different purpose, cannot be lifted across into the customer due diligence file. It answers a different question. Firms that reuse it end up with a beneficial ownership map that is missing exactly the people the AML regime is most interested in.

The general obligation is set out in customer due diligence under Tranche 2.

Succession planning splits at the death line

Draft a will that establishes a testamentary trust and you are outside table 6 entirely. Testamentary trusts are carved out of the definition of legal arrangement for these purposes, as are trusts arising solely by operation of law.

Settle an inter vivos discretionary trust for the same family, for the same succession reasons, on the same afternoon, and item 6 applies with the full customer list attached.

The tax analysis barely notices the difference. The AML analysis turns on it completely.

The restructure leaves behind a service that never ends

You incorporate the new company. You put the firm’s address down as its registered office, the way practices have done for decades as a convenience.

That is item 9, a separate designated service, with its own customer, and it does not stop when the restructure closes. It runs for as long as the address stays on the ASIC record. It applies whether or not you charge for it.

Same for a corporate trustee the firm sits on, or a directorship someone in the practice holds for a client. That is item 7, and it is also continuing.

So a single restructure can generate a one off designated service under item 6 and then 2 permanent ones under items 7 and 9, attached to entities the firm created itself. The ongoing due diligence and transaction monitoring obligations attach to those relationships and stay attached. The wider map of which work is caught is in which accounting services trigger Tranche 2.

Two clocks on the same restructure

The tax file and the compliance file both start running on completion day, and they run for different lengths on different triggers.

On the tax side, the safe harbour for a genuine restructure asks you to hold the position for 3 years after the transfer: no change in ultimate economic ownership of the significant assets, those assets staying active, no material private use. Records under the general rule run 5 years.

On the AML side, customer due diligence records run 7 years from the end of the business relationship, and where you have taken on a registered office or a trustee role, that relationship has no obvious end date at all. Ongoing due diligence continues throughout.

A firm that archives the restructure file at the 5 year mark, the way it always has, will be destroying customer identification records it is still required to hold. What has to be kept is set out in record keeping under Tranche 2.

6 things to change in your restructure workflow

1. Move initial customer due diligence to the engagement stage, before any instruction to build or reshape an entity is acted on.
2. Decide at the outset whether the job creates an entity or only moves assets between existing ones. That single fact determines whether item 6 is engaged.
3. For any entity creation, build the customer list from the provision, not from the invoice. Directors and beneficial owners for a company. Trustee, settlor and beneficiaries for a trust.
4. Do the beneficial ownership analysis separately from the ultimate economic ownership analysis. Do not let one populate the other.
5. Flag registered office and trustee or director appointments as continuing designated services with their own ongoing obligations, not as administrative favours.
6. Set retention on the compliance file to 7 years from the end of the relationship, and stop letting the tax archive schedule govern it.

Keeping an entity creation file that survives an audit, with each customer in the set identified and verified and the beneficial ownership mapped separately from the tax analysis, is what HP-KYC is built for. The rollover analysis stays in the tax file where it belongs.

Where holding client money during the restructure fits is covered in when holding client money triggers Tranche 2.

The regulatory detail

Current as at July 2026.

Table 6 of subsection 6(5B) of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) was inserted by Schedule 3 of the Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024. Obligations for professional service providers commence on 1 July 2026. Enrolment opened on 31 March 2026, and a newly regulated entity must enrol within 28 days of first providing a designated service and in any event by 29 July 2026.

Item 6 of table 6 covers assisting a person to plan or execute, or otherwise acting on behalf of a person in, the creation or restructuring of a body corporate (other than a corporation under the Corporations (Aboriginal and Torres Strait Islander) Act 2006) or a legal arrangement, in the course of carrying on a business.

The customer for item 6 is the person giving instructions, and in addition: where the body corporate is a company and the service is creating the company, the beneficial owners and directors of the company; where the legal arrangement is an express trust and the service is creating the express trust, the trustee, settlor and beneficiaries of the trust.

Restructuring for item 6 means changing the legal form of the body corporate or legal arrangement, including through a merger or demerger. It does not extend to matters unrelated to legal form, such as organisational staffing profile, IT systems, or small business debt restructuring under the Corporations Act 2001, although item 4 of table 6 may separately apply to some debt restructuring. It does not include the creation or restructuring of testamentary trusts or trusts not created intentionally or in writing.

Preparatory steps within item 6 include drafting, reviewing and negotiating company constitutions, partnership agreements, shareholders agreements and documents creating corporate trustees; drafting and reviewing trust deeds including discretionary and bare trust deeds; documents supporting mergers and demergers; registering applications and forms with ASIC; obtaining Foreign Investment Review Board approvals and ASX and ASIC waivers; and conducting due diligence on accounts and finances prior to a transaction.

Assistance is only regulated where it is sufficiently linked to the outcome. A person’s assistance must directly advance the relevant transaction or the creation or restructure. Merely influencing how the customer proceeds, providing general advice, or providing ancillary services is not sufficient. A person commences providing the designated service when they act on instructions, which will typically be when two or more parties to a transaction exist or when preparatory steps are taken to create or restructure. Advice comprehensive enough to allow the client to create the structure without further professional assistance is treated as directly advancing it.

Legal arrangement means an express trust, a partnership, a joint venture, an unincorporated association, or a similar arrangement including a foreign arrangement. An express trust is one created expressly or intentionally in writing by a settlor, and expressly excludes a testamentary trust.

Item 7 of table 6 covers acting as, or arranging for another person to act as, a director or secretary of a company, a power of attorney of a body corporate or legal arrangement, a partner in a partnership, a trustee of an express trust, or a functionally equivalent position, on behalf of a nominator. Item 8 covers acting as, or arranging for another person to act as, a nominee shareholder. Item 9 covers providing a registered office address or principal place of business address of a body corporate or legal arrangement. The customer for items 7 and 8 is the nominator; for item 9 it is the person provided with the address. Item 9 applies whether or not the service is provided free of charge.

A table 6 service must be provided in the course of carrying on a business. A service can be provided in the course of business even where it is not the only service the business provides, is provided only once, or is provided free of charge or at a reduced price.

Initial customer due diligence must be completed before the designated service is provided: sections 26F and 28 of the AML/CTF Act and the AML/CTF Rules. Collecting information and verifying it are separate obligations, and verification must rely on reliable and independent data. Beneficial owners must be identified and verified. The customer due diligence reforms commenced on 31 March 2026.

Customer due diligence records must be kept for 7 years from the date the business relationship ends: section 111 of the AML/CTF Act.

The small business restructure rollover is in Subdivision 328-G of the Income Tax Assessment Act 1997, available from 1 July 2016. It applies to transfers of active assets that are CGT assets, depreciating assets, trading stock or revenue assets, where each party is a small business entity with aggregated turnover under $10 million, or an affiliate of or connected with one, or a partner in such a partnership. The transfer must form part of a genuine restructure of an ongoing business and must not change the ultimate economic ownership of the transferred assets, including each individual’s proportionate share where there is more than one.

The safe harbour in section 328-435 treats the genuine restructure condition as satisfied where, for 3 years after the transaction takes effect, there is no change in ultimate economic ownership of the significant assets transferred, those assets continue to be active assets, and there is no significant or material private use of them. Guidance on the genuine restructure test is in Law Companion Ruling LCR 2016/3, and on the consequences of the rollover in LCR 2016/2.

Ultimate economic ownership can only be held by natural persons. Discretionary trusts may satisfy the test where there is no practical change in which individuals economically benefit. Family trusts may satisfy an alternative test where the trustee has made a family trust election and every individual with ultimate economic ownership before and after the transfer is a member of the relevant family group.

General record retention for tax purposes is 5 years: section 262A of the Income Tax Assessment Act 1936.

Homepedia is an enrolled reporting entity under the AML/CTF Act. This article is general information, not advice for a specific restructure.