Changing from Sole Prop to Pty

[Dave A]

My accountant has just told me how stupid i was registering my company

So is he/she fired yet?
You need an accountant who can give you meaningful advice on how to maximise the potential opportunities of the transition rather than express an opinion on your intelligence.

1. Can the sole prop just close down and the Pty take over or does the Sole Prop have to sell to the Pty?

You can wind down the sole prop and move the business activities into the Pty Ltd.
You can lease or sell the assets to the Pty Ltd.
You could sell the whole thing as a going concern.

Each has consequences. My suggestion is map out the consequences of each and then evaluate which course of action makes the most sense for your situation.