Passing the Farm to the Next Generation Without a Tax Headache
If you’ve farmed in the Wimmera for any length of time, you’ve probably had the conversation — maybe over a cup of tea at the kitchen table, maybe in the ute on the way back from checking stock. Someone asks: “So what happens to the place when you’re ready to step back?”
It’s one of the biggest financial and emotional decisions a farming family makes, and it’s also one that too many families leave too late. We wanted to walk through what succession planning actually involves, why it matters more than most people realise, and what you can do now to make sure the farm passes on smoothly — without handing the next generation a tax bill that makes them regret saying yes.
Why this isn’t just a legal document
A lot of people think succession planning means “getting the will sorted.” A will matters, but on its own it’s rarely enough. A proper succession plan looks at:
- Who’s actually going to run the farm — and whether that person wants to
- How ownership of land, machinery, livestock and water entitlements will transfer
- How you’ll fund your own retirement once the income from the farm isn’t yours anymore
- What happens to children who aren’t taking over the farm, so nobody feels short-changed
- The tax consequences of every one of the above
Get the legal side right but ignore the tax side, and you can end up with a family that agrees on everything — and a transfer that costs far more than it needed to.
The tax traps that catch farming families
There are a few areas where we see families come unstuck if they haven’t planned ahead:
- Capital gains tax (CGT) on the transfer of land, when the farm has been held for decades and the value has grown well beyond what anyone expected
- Stamp duty on transferring the property, even between parents and children, if the transfer doesn’t meet the conditions for an exemption
- Division of assets that accidentally triggers a tax event — for example, restructuring who owns what to make things “fairer” between siblings
- Superannuation and retirement funding gaps, where the farm was always the retirement plan, but converting land into a livable income isn’t automatic
- Trust and company structures that made sense thirty years ago but no longer fit the family or the tax rules today
None of these are reasons to avoid succession planning. They’re exactly why it pays to start early, while there’s still time to structure things properly.
The tools that can help
The good news is there’s a genuine toolkit available for farming families, and used well, it can make a real difference:
- The family farm stamp duty exemption — transfers of primary production land between family members can be exempt from Victorian stamp duty, provided the land keeps being used for farming and the transfer isn’t structured to avoid tax
- Small business CGT concessions — depending on the value of the farm and how it’s structured, some or all of the capital gain on transfer may be reduced or eliminated
- Farm Management Deposits — useful for smoothing income in the lead-up to a transition, particularly around a variable season
- Testamentary and family trusts — can provide flexibility for how income and assets are eventually distributed, though they need to be reviewed regularly, not just set up once and forgotten
- Staged transfers — handing over control and ownership gradually, rather than all at once, so everyone can adjust and the tax impact can be spread out
Which of these apply — and how much they’re actually worth — depends entirely on your specific situation, so this isn’t a “pick one off the shelf” exercise.
What good succession planning actually looks like
In practice, a proper plan usually means:
- Starting the conversation early — ideally five to ten years before any transfer, not five months
- Getting the whole family talking, even the parts of the conversation that feel awkward
- Valuing the farm and the other assets properly, so everyone’s working from the same numbers
- Working out your own retirement income separately from the farm’s future, so you’re not relying entirely on the next generation’s success
- Reviewing the ownership structure (trust, company, partnership, individual) to see if it still fits
- Putting a written plan in place — not just a verbal understanding — that your accountant, your lawyer and your family are all working from
What this doesn’t mean
To be clear about what succession planning isn’t:
- It isn’t about giving up control before you’re ready — a good plan can be staged entirely on your timeline
- It isn’t only for families that are struggling to agree — even families with a clear “obvious successor” benefit from having the tax and legal side properly documented
- It isn’t a one-off task — plans need to be revisited as land values, family circumstances and tax rules change
- It isn’t something your accountant or your lawyer can do well in isolation from each other — the best outcomes happen when they’re talking to each other, not working from separate briefs
What you can do to get started
If you’ve been putting off this conversation, a few practical first steps:
- Get a current valuation of the farm, including land, water entitlements, machinery and livestock
- Write down, honestly, who in the family wants to take over — and who doesn’t
- Think about what “fair” looks like for the children not taking over the farm, since equal isn’t always fair and fair isn’t always equal
- Book a conversation with us before you talk to a lawyer about drafting anything — getting the tax structure right first saves redoing legal paperwork later
Any questions?
We know this is a big topic, and every farming family’s situation is different — there’s no template that fits everyone. If you’d like to start mapping out what a succession plan could look like for your farm, get in touch and we’ll talk through your options.