Rural succession planning remains a major focus of  the Australian agricultural sector. With over half of  Australia’s rural enterprises owned by Baby Boomers  who are nearing retirement, implementing a transfer  of farming property and rural enterprises to family  members is firmly in the minds of those looking to  plan for the future.

In Queensland, there has long been a duty concession  available when a farm that is used to carry on a  primary production business is gifted to the children  or grandchildren of the existing owners. A similar  duty exemption is also available on the gift of a  partnership interest or units in particular family unit  trusts that hold primary production business assets to  lineal descendants.

While this concession is accessed regularly, the  limitation has always been that the transfer had to be  from an ancestor to their lineal descendant.

But the reality for many families within the agricultural  sector is that their succession planning involves  transfers between other family members (for example,  from sibling to sibling or uncle to nephew), instead of  just cases where properties are handed down from  mum and dad to the children. Previously there was no  stamp duty concession in these circumstances.

CHANGES TO THE QUEENSLAND DUTIES ACT

As part of the 2014-2015 Budget, the Queensland  State Government announced changes to widen  the availability of the stamp duty concession for  intergenerational transfers of primary production land  and business assets.

The amendments, which took effect from 1 July 2014,  broaden the scope of these exemptions by removing  the requirement that the recipient of the property be  a direct lineal descendant of the transferor. This means  that the concession will now be available for transfers  to a wider range of family members – including spouses, grandparents, siblings, aunts, uncles, nieces  and nephews.

While the changes are welcome and provide  greater flexibility for succession planning for  primary production businesses, it is important to  understand that:

  • the transfer must still be by way of gift. Where any  consideration for the business property passes  between the transferor and transferee, the duty  exemption will not be available to the extent that  consideration is provided.

Importantly, if the property is subject to an existing  mortgage and the acquirer assumes liability under  that mortgage, the assumption of that liability will  be treated as consideration for the transfer, and

  • the duty exemption will not extend to transfers to companies or trusts (even if controlled by members  of the family group that fall within the range of  eligible recipients). This is a significant limitation to  the exemption – particularly in circumstances where,  in a broader tax and estate planning context, it is  often advantageous to have these types of business  assets held through discretionary trusts.

These limitations should not overshadow the  importance of the changes and the greater succession  planning possibilities that are now available to families  within Queensland’s agricultural sector.