Planning for farm succession at tax time
As well as Business and Family Relationship Management, Financial Management and its many considerations is integral to the success of all Succession Planning endeavours.
When the financial planets align, the wheels of succession turn far more effectively.
Timing and planning to ensure all possible regulatory concessions are taken advantage of is essential in achieving the most desirable outcome for all.
Navigating the impost of taxes, associated with intergenerational property transfers and the provision of future independent income for exiting generations, can make or break the financial viability of a family’s desire for succession.
At the moment our farming and grazing communities have been experiencing the best seasons for some time.
In many cases significant debt reduction has been possible due to greater production incomes and financiers are more positive about future serviceability, when it comes to funding succession. But on the flip side, such positive financial performance can now see the unprepared, lose the ability to take advantage of available capital gains tax exemptions due to annual turnover limits, should succession opportunities fail to be proactively assessed and by default, delayed.
At the same time, exiting generations that “hang on” too long can lose the ability, based on age limits, to access the tax-free retirement income, that the superannuation investment environment can deliver.
So, this year when considering your annual tax planning, it is more important than ever for multi-generation farming and grazing enterprises to be thinking about what their future is to look like and how the possible scenarios for farm succession could be planned for, in the most financially effective way.
Copyright 2022. Carrick Aland Rural and Small Business Financial Specialists. Image by Brooke Bartkowski.