While it’s easy to be consumed by the everyday demands of working in your rural business, the importance of planning your financial future, including selling your rural business and planning your retirement should never be underestimated.
The importance of early planning
As a financial adviser who has worked with farming families for more than 30 years, I am accustomed to assisting families with the development of succession strategies for the transfer of the business and land onto the next generation, or partial or full sale of the business, as well as planning for their retirement. Early planning and seeking professional advice is critical to take into account the complexities which can be associated when personal and business affairs are intertwined.
I’m well placed to collaborate with your accountant, solicitor and other aligned professionals to help prepare for the succession of your business including:
- Obtaining a valuation for the business including cash flow projections, assessing assets and liabilities and goodwillᶲ;
- Facilitating due diligence procedures and getting financial accounts in orderᶲ;
- Facilitating the business succession and the competing interestsᶲ:
- To siblings via a buy sell or partnership agreementᶲ;
- To the next generation via a Succession or Estate Planᶲ;
- Partial or full sale to non-related third partiesᶲ.
- Facilitating Succession meetings and strategies and working with aligned professionalsᶲ;
- Providing a road map of the required steps to make the plan come to lifeᶲ;
- Facilitation of the business sale process and negotiation with other aligned professionalsᶲ;
- Organising your personal finances following the sale, including investments and superannuation and considering tax implications; and
- Undertaking an ongoing review of the strategies developed as the needs of the business and your retirement goals change due to business, seasonal or family circumstances.
We recognise that every family is different and that each member within the extended business unit will have their own needs and goals that will need to be addressed and considered.
Maximising super contributions
Like most rural business owners, you may have returned any profits back into the business and may have neglected making additional contributions to your super.
I can help you to investigate strategies that may be appropriate for you, incorporating the competing needs of the business succession or partnership agreement limitations. You may be able to use some of the proceeds from the succession, or retention of the land, to create a tax-effective income for your retirement years. Depending on your circumstances, proceeds can be contributed to your superannuation and they will not be treated as concessional or non-concessional contributions (if the contribution does not exceed your lifetime CGT cap, which is currently $1.415 million[1]). There are conditions and administration requirements which must be met so it is important to seek professional advice.
Planning your retirement
While making the most of your super is important, there are other factors to consider when developing succession plans for your business and transitioning into retirement. Seeking professional advice can help you:
- Develop a Succession Planᶲ;
- Link the Succession process into Partnership Agreements and Estate Plansᶲ;
- Liaise with aligned professionals to ensure that Estate Plans reflect the agreed outcomes of the intergenerational transferᶲ;
- Create an investment strategy for your circumstances and retirement wishes;
- Review and update business and personal insurance protection to align to your changing circumstances;
- Consider business property assets which may be associated with a SMSF; and
- Other retirement planning strategies appropriate for your personal circumstances.
For more details or to arrange an appointment to discuss your business succession and retirement needs, please give me a call.
ᶲThis advice is provided by Phillip Dibben under Financial Services SA rural business consulting services.
Phillip Dibben is a financial adviser at Active Financial Management. Active Financial Management and its advisers are Authorised Representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306 trading as Fortnum Financial Advisers.
This information (including taxation) does not consider your personal circumstances and is of a general nature only. You should not act on the information provided without first obtaining advice specific to your circumstances.
Phillip Dibben also operates Financial Services SA rural business consulting services.
Phillip Dibben is an MFAA Approved Credit Adviser, including SMSF lending, and is an Authorised Credit Representative with Riverland Lending Services Pty Ltd, ABN 37 1415 814 080 ACL 391835, and is licensed to provide advice in all consumer and business loans including equipment finance. All loans are subject to lending and approval criteria.
This publication cannot be reproduced in any form without the express written consent of the author.
[1] https://www.ato.gov.au/Rates/Key-superannuation-rates-and-thresholds/?anchor=CGTcapamount#CGTcapamount