Farming families will have less hurdles when it comes to succession planning thanks to the announcement of a new stamp duty exemption for intergenerational transfers of farm businesses in the June Queensland state budget.
The exemption, which is part of the Government’s $36 million Rural Assistance Package, sees the removal of transfer duty on all family property transfers for farms.
BMO Accountants Partner David Briese said the change will make it easier for offspring to pay for their parents’ farms.
“This will certainly ease some of the obstacles encountered when undertaking succession planning for farming families. An exemption from Stamp Duty in Queensland for the gifting of primary production (farm) land from parents to children has been in existence for some time. However, if the children paid any consideration for the farm to their parents, for instance, where the value of the farm was only partly gifted, then stamp duty was payable on the amount paid.
“From the 1 July 2016, parents will be able to receive money to fund their retirement from their children when transferring ownership of the family farm, without the children having to pay any stamp duty on the amount paid,” Mr Briese said.
Mr Briese went on to further explain in dollar figures, the real savings for the next farming generation.
“For example, mum and dad decide to transfer the family farm to their son. The farm has a market value of $2.5 million, they are willing to gift $1.5 million of its value, but wish their son to pay them $1 million. The new exemption will mean a saving of $38,025 in stamp duty on this instance. If their son paid the full purchase amount of $2.5 million, there is a saving of $124,275 in transfer duty,” Mr Briese explained.
“In the past this extra burden of cost prevented succession planning from proceeding, meaning some families were even forced to sell the family farm rather than pass it on.”
Also announced under the Rural Assistance Package were grants of up to $2,500 for farmers to seek financial advice, access succession planning services or take out multi-peril crop insurance.
Mr Briese said primary producers should seek advice from their accountant and/or solicitor before making any major financial or property decisions.