Clear Tax Warns Buyers: The Wrong Business Purchase Structure Can Be Costly

MELBOURNE, Australia - March 11, 2026 - PRLog -- Clear Tax is urging Australians planning to buy a business to carefully review the structure of the purchase, warning that the wrong decision can expose buyers to major tax risks before the business even begins operating under new ownership.

Many buyers focus mainly on the purchase price and projected revenue. However, tax specialists say the structure of the transaction often has a far greater long-term impact.

Two Ways Most Businesses Are Purchased

In Australia, most acquisitions follow one of two paths: buying the shares of a company or buying the assets of a business.

A share purchase means acquiring the company itself. The buyer steps into the position of the previous owner and takes control of the entity along with its financial history.

An asset purchase works differently. The buyer selects specific items such as equipment, goodwill, customer lists, or intellectual property. The legal entity usually remains with the seller.

Risks Often Hidden in Share Purchases

While share purchases can appear straightforward, they may carry risks that are not immediately visible during negotiations.

Outstanding obligations, such as unpaid GST or PAYG withholding, can remain within the company. Internal company loans may also create issues under Division 7A rules if they have not been managed correctly.

"Many buyers believe they are purchasing a successful operation," says Yuvraj Verma, Director and Co-Founder of Clear Tax. "But if the company has unresolved tax obligations, those issues may follow the new owner."

Australia's Director Penalty Regime can also become relevant once a buyer becomes a company director. In certain cases, directors can become personally responsible for specific unpaid tax debts.

Why Share Purchases Still Happen

Despite these risks, share purchases are not always avoided. Some buyers may want access to tax losses carried forward within the company. Others may rely on contracts or licences that cannot easily transfer to a new entity.

When these factors exist, a share purchase may still be the preferred structure.

Asset Purchases Offer a Cleaner Start

Asset purchases are often seen as the safer option. Buyers can select the parts of the business they want while leaving behind the existing company and its liabilities.

However, this approach can also have trade-offs. Buyers may lose access to historical tax losses, and stamp duty outcomes may vary depending on the state.

Clear Tax advises buyers to conduct proper tax due diligence before signing any agreements.

"A deal that looks attractive on paper can quickly change if tax risks appear later," Verma adds.

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