Traditionally family businesses have passed to younger generations through the process of succession. However, with an aging population, more and more families are looking for alternative ways to transition family businesses to younger generations during the life of their parents.
Historically this would have been a costly process, with transfer duty payable unless there was a gift of the property with no “consideration”. The introduction of the family business concession in Queensland, which applies to the transfer of assets which are used to carry on a primary production businesses or a prescribed businesses, alleviates part of this financial burden.
The concessions may also apply where there is a transfer from family company, trust or share interests involved, provided that the assets are transferred to an individual who is a defined relative under the Duties Act (Qld). A defined relative includes your spouse and an extensive list of family members. Since 22 May 2019, a defined relative no longer includes first cousins.
The concession will only apply where the property transferred is used by the original owner to ‘carry on’ the primary production business. There are a number of criteria that a business must satisfy in order to be eligible for the concession. This is particularly important where a parent is looking to transition to retirement.
Primary production business
A primary production business in the field agriculture, pasturage or dairy farming may be transferred to a ‘defined relative’ without incurring transfer duty. “Agriculture, pasturage or dairy farming” include businesses which relate to the cultivation of land or the maintenance of animals for the purpose of sale, or the sale of their produce.
There is no maximum value limit for the transfer of a primary production business.
The transfer of any business assets may have additional taxation consequences. We recommend you contact your legal or financial advisors to discuss any additional matters that may need to be addressed prior to undertaking any restructuring.
This article was originally published in the Queensland Country Life (Australia).