Farm succession planning: Call to axe taxes for transferring ownership
Farmers are being advised they’re better off letting their children wait to inherit the family farm, than fork out millions in ownership transfer charges. Is it time to scrap the taxes?
ACCOUNTANTS are advising farmers they are better off if they “just let the kids wait for you to die” than rack up million-dollar tax bills by transferring farm ownership while still alive.
Capital gains tax and transfer fees are proving almost insurmountable barriers for young people wanting to buy the family farm, a Coalition-dominated parliamentary inquiry has found, and could force the next generation of farmers out of the industry.
The Growing Australia report has called for a Treasury review into the tax implications of farm ownership transfer, with the aim of scrapping financial disincentives to succession planning.
“There is a real possibility that the willing, enthusiastic children, who are the drivers of innovation and change in the agricultural industry, are in danger of never actually owning their property,” the report states.
“Their generation and possibly the next could miss the opportunity waiting for the ultimate death of their parents so they may inherit the farm.”
Evidence given to the inquiry showed that one farmer faced a $785,551 bill to transfer farm ownership to his son, despite no money changing hands.
Another West Australian farmer said his accountant advised his CGT bill would be about $2 million and that he should “just let the kids wait for you to die”.
“To think that they (his children) would not own any property until they’re in their sixties or seventies is pretty disappointing,” he said.
Agriculture Minister David Littleproud did not specifically respond when asked if he would pursue the suggested review, instead stating the government’s AgriStarter loans “are just one of the measures we have developed to help new entrants get into farming and succession planning”.
The loans, which open for applications from January 1, will provide up to $2m to people wanting to buy a new or existing farm business.
National Farmers’ Federation chief economist Ash Salardini said the inquiry had highlighted the problem with taxes on farm ownership transfers. “The issue is even more fraught where the farm business might be going to more than one son or daughter,” he said.
Mr Salardini said removing the tax barriers would help, but that “you need to have a succession plan in the first place to execute”.
“Long-term succession planning is the only solution and we are talking five to 10-year horizons for any succession plan,” he said.
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