Tax, Asset and Succession Compliance Issues Agribusiness Owners Should Review This Financial Year

For agribusiness owners, annual compliance extends beyond lodging tax returns. Land, livestock, water rights, machinery, trusts, companies, partnerships and personal assets often operate together. If ownership, records and succession arrangements are not aligned, a routine transaction or unexpected event can create avoidable tax and legal risks.

Reconcile the whole business

Review income and expenses across every entity involved in the business, including any trading, landholding or investment entities.

Check:

• livestock, crop, wool and produce records
• grants, subsidies, insurance recoveries and disaster-related payments
• private use of vehicles, stock and farm assets
• related-party transactions, loans and drawings
• activity statements, PAYG instalments and tax liabilities
• business and private expenditure classifications.

Primary producers may have access to income averaging and Farm Management Deposits (FMDs), but both have eligibility and timing rules. An FMD deduction is generally linked to the year of deposit, while a repayment of an amount previously deducted is generally assessable income when withdrawn. Review existing arrangements before making, rolling over or withdrawing deposits.

Review land and GST before a transaction

Before selling, leasing, re-zoning or subdividing land, obtain advice on:

• whether the transaction is on capital or revenue account
• whether GST, going-concern or farmland rules may apply
• the purchaser’s intended use of the land
• the land’s farming history
• cost-base allocation across subdivided lots
• development, infrastructure and holding costs
• state or territory land tax and duty obligations
• whether the transaction involves an associate or related entity.

Some farmland sales may be GST-free where specific conditions are met. Subdivided and vacant land has additional rules, so do not assume that a tax treatment applying to the original farm will apply to every new lot.

Obtain a written tax position before signing a contract. A transaction can have a different outcome depending on whether it is treated as a farm sale, business sale, land development project or related-party transfer.

Test CGT concessions and maintain asset histories

Small business CGT concessions can be valuable, but they are not automatic. Before relying on one, review:

• the entity’s eligibility and net asset position
• whether the asset passes the active asset test
• periods of private use or rental to unrelated parties
• whether the asset is land, water rights, goodwill, shares or a trust interest
• whether the asset has been subdivided or converted to another use
• any retirement, restructure, replacement-asset or superannuation conditions.

Vacant subdivided land is a particular risk. A larger parcel’s history as a working farm does not necessarily mean every new vacant lot will qualify as an active asset.

Keep acquisition documents, improvement costs, valuations, ownership records and details of business, private and rental use for major assets. These records may be needed years later when an asset is sold or transferred to the next generation.

Confirm ownership, structures and governance

Your accounting records may show who paid for an asset, but not necessarily who legally owns it. Confirm the ownership and accounting treatment of:

• land and improvements
• water licences and entitlements
• livestock and breeding stock
• machinery and vehicles
• irrigation systems, dams, bores and water facilities
• fencing, sheds, silos and fodder storage
• orchards, carbon-related rights and farm intellectual property.

Check that major assets are held by the intended entity, properly documented and appropriately insured. Where one entity uses an asset owned by another, review any lease, licence or usage arrangement.

Also review:

• trust deeds, appointor and trustee details
• company constitutions, share registers and shareholder agreements
• partnership agreements
• trustee and director minutes or resolutions
• beneficiary distribution records
• ABNs, tax registrations and ASIC records
• director identification numbers and related-party loan agreements.

If the business, family, borrowing or risk profile has changed, the original structure may no longer be suitable. Governing documents should be reviewed alongside the will and succession plan so they work together.

Make succession arrangements workable

Succession planning should address retirement, illness, incapacity, death and the sudden loss of a key decision-maker.

A practical plan should identify:

• who will manage the business
• who will own the land, business and other major assets
• whether the transfer will be a sale, gift, restructure or gradual transition
• how the outgoing owner will fund retirement
• how the incoming owner will fund the purchase
• how non-operating family members will be treated fairly
• who can make decisions if an owner loses capacity
• how debt, guarantees and employee obligations will be managed.

An independent valuation of the business and major assets can help distinguish equality from fairness, clarify funding requirements and identify potential tax consequences.

A will does not automatically control every asset. Company assets, trust assets, jointly owned property and superannuation may pass under different rules. Review:

• current wills and enduring powers of attorney
• trustee, appointor and successor arrangements
• superannuation death benefit nominations
• life insurance for debt repayment or ownership transition
• company share transfers and director appointments
• SMSF trust deeds and trustee arrangements, where relevant.

Superannuation nominations should be checked regularly because fund rules and tax outcomes can differ depending on the nomination, recipient and payment method. Company officeholder changes must also be recorded and notified within the applicable timeframe.

A simple 12-month action plan

In the next 30 days

• Reconcile bank accounts, loans and related-party balances.
• Update the asset register and locate missing ownership documents.
• List upcoming sales, acquisitions, subdivisions and restructures.
• Confirm that wills, powers of attorney and superannuation nominations are current.

Before the next major transaction

• Obtain tax and legal advice before signing contracts.
• Confirm GST, CGT, land tax and duty implications.
• Review valuations, cost bases and funding arrangements.
• Document related-party transfers and financing.

Before 30 June 2027

• Review FMD and income averaging decisions.
• Confirm livestock, crop and year-end records.
• Check depreciation and capital expenditure claims.
• Finalise trust resolutions and governance records.
• Update the succession plan for changes in family or business circumstances.

Final thought

The best time to address tax, asset and succession risks is before a sale, dispute, illness or death makes decisions urgent. A coordinated annual review can identify gaps early, preserve flexibility and give the next generation a clearer path forward.

For More Information

If you would like help reviewing how these measures could affect your property position, acquisition plans or exit strategy, Archer Gowland Redshaw can help you assess the practical implications in the context of your broader financial objectives.