For many farming families, succession planning sits on the list of things to get to ‘one day’.
There’s always another season to manage, another opportunity to chase, another challenge demanding attention. The farm is busy. The business is growing. The family is getting on with life.
But recent changes to Australia’s capital gains tax (CGT) rules may mean that putting succession planning in the ‘too hard basket’ becomes a much more expensive decision.
From 1 July 2027, the long-standing 50% CGT discount will largely be replaced by cost base indexation, with a minimum 30% tax applying to capital gains accrued after that date. Transitional arrangements will apply, but for many family businesses, particularly those holding significant farming land and business assets, the changes introduce a new layer of complexity that shouldn’t be ignored.
While much of the discussion has focused on the tax implications, we believe the real message for farming families is broader:
Good succession planning has never been more important.
When people hear ‘succession planning’, they often assume we’re talking about wills, estates and tax. They’re all important, but they’re only part of the picture.
The most successful transitions we’ve seen happen because families start having conversations early. They take the time to consider questions such as:
The tax outcomes are often a consequence of those decisions, not the starting point.
For many farming families, the farm has been held across generations. Significant value has been created over decades through hard work, strategic investment and rising land values.
The proposed CGT reforms change the way future gains will be calculated and taxed. In addition, assets held across the 1 July 2027 transition point will require their value to be determined as at that date, either through a valuation or an ATO-approved methodology.
That alone creates a planning opportunity. Families who have not recently reviewed their structures, ownership arrangements or succession plans may find it worthwhile to do so before the new rules commence. Importantly, we’re not suggesting that families rush into major decisions because of tax policy as good succession outcomes rarely come from making reactive decisions. However, understanding how the changes may affect your family’s future plans gives you more options and more time to make informed decisions.
In many industries, business ownership and family wealth are separate. In agriculture, they’re often the same thing. The farm isn’t just a place of work, it’s the family’s largest asset, the source of current income, and often the foundation of future wealth for multiple generations. That complexity is one reason succession planning can feel overwhelming.
A decision that seems straightforward from a tax perspective can have unintended consequences for cash flow, borrowing capacity, retirement planning, family relationships or future business growth. That’s why the best succession plans bring together multiple disciplines, including:
One of the biggest myths in succession planning is that it becomes relevant when someone is ready to retire. In reality, that’s often too late. The conversations that create successful transitions frequently start five, ten or even fifteen years before ownership changes hands. Early planning allows families to:
Most importantly, it gives families choices.
While much attention has been given to what the CGT reforms may cost, they also provide a useful trigger for farming families to review plans that may not have been revisited for years. If your succession plan hasn’t been updated recently, or if you don’t yet have one, now is an ideal time to start the conversation.
At Exant, we work alongside families to develop practical, tailored strategies that support both the future of the business and the aspirations of the people behind it. Speak with your usual Exant advisor or contact our specialists John Kotzur or Tim Mouritz via the form below or on 07 3218 3900.
Author: John Kotzur
