Drought Opens Up Succession Discussions and Opportunities
Young farmers looking for a reason to raise succession discussions with older generations can potentially find some benefits from the ongoing drought.
Hamish Cullenward grew up on a property north of Bourke and is now a Chartered Accountant and Director of Boyce Chartered Accountants. Hamish has some great ideas for young farmers in families contemplating succession.
Reduced production and subsequently revenue is an unfortunate side effect of the drought however this potentially opens up the opportunity to fall below specific revenue thresholds for capital gains tax concessions. A big hurdle for passing on property from one generation to another is realising capital gains tax and other costs such as stamp duty (learn more about capital gains tax here).
This hurdle then becomes an impediment for important succession discussions and a driver of unfortunate outcomes not aligned with either generations preferences.
Whilst being a complex area it is important to note that significant savings can be made through good planning and open dialogue. It is not uncommon for families to accrue a huge deferred tax liability on land they bought a long time ago which has increased in value considerably. If eligible, large parcels of land can be transferred from one generation to another free of capital gains tax. Note there are also potentially concessions available for stamp duty on inter-generational land transfers and advice can be sought from your legal adviser to determine if you qualify.
We believe that succession discussions should be an inherent part of any business plan and when curve balls such as drought arise having everyone on the same page allows for opportunities to be taken.
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