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30 January 2023

It Depends – Intergenerational succession

In this edition of ‘It depends’, partner Scott Hay-Bartlem talks about intergenerational succession. Scott covers what intergenerational succession is, what assets are involved, and whether there are tax or duty consequences.

In this week’s edition of ‘It depends’, partner Scott Hay-Bartlem talks about intergenerational succession. Scott covers what intergenerational succession is, what assets are involved, and whether there are tax or duty consequences.

Scott, along with Annie Smeaton, Justine Woods, Hayley Mitchell, Murray Shume and Tom Walrut, will be presenting on this topic at our Annual Adviser Conference on 23 and 24 March 2023. Register now to attend in person or online.

Video transcript

Welcome to this edition of It depends. I’m talking about intergenerational succession.

What is intergenerational succession?

So, intergenerational succession is when we’re passing assets from one generation down to another. So, it might be parents to children or grandchildren or nephews and nieces. But it’s moving it down the line effectively.

What assets are involved?

So, when we’re talking intergenerational succession, we’re often talking businesses. So, it might be a restaurant chain. It might be a manufacturing business, hardware stores, primary production business and land. It may be investment assets such as a big share portfolio, lots of real estate, development, or even just passive investment vehicles.

What’s involved in intergenerational succession?

Well, this is your big it depends. Now, how we actually pass assets down from generation to generation is going to depend upon quite a range of things. So, first of all, are we doing it now or after death? Or some combination of both, some now, some later? Are we doing it to avoid estate challenges? Are we doing it to get assets down to the children now because you want to reward them for being involved in the business? Keep them engaged, those sorts of things. It will also depend upon the types of assets and how they’re owned. So, maybe we’re passing assets owned by mum or dad down to the kids. So, we’re transferring the assets. Maybe we have family trusts or companies or even SMSFs involved. In which case we’re going to be looking at how we pass control of the companies or the family trusts or that SMSF structure. It’s a big range of options for us.

Are there any tax or duty consequences?

Well, in this edition you get two it depends for the price one, because the tax and duty issues will depend upon exactly how we’re doing it. As I said in the last question, there’s a range of options. So, maybe there’s no CGT event, maybe there’s no dutiable transaction because we’re passing control of a trust, maybe we’re transferring an asset, but we can use small business concessions to make the capital gain go away. Or maybe we can use some sort of duty exemption like for primary production or for the newer small business restructure rollover. So, once you work out how we’re doing it. We can then look at minimising the tax and duty consequences. Now we’re speaking a lot about this at the Annual Advisor Conference we’ve got coming up on 23 and 24 March 2023. So, the first half day is a workshop around all the issues in intergenerational succession, which includes some more unusual ones like employment law and family law type issues along the way. So, if you’d like to know more and come along to our Annual Advisor Conference or contact a member of our private clients team. Thanks for watching this It depends.

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This publication is for information only and is not legal advice. You should obtain advice that is specific to your circumstances and not rely on this publication as legal advice. If there are any issues you would like us to advise you on arising from this publication, please let us know.

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Scott Hay-Bartlem
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