Succession

Succession

Issue:
Starting out in any business is tough and it's no different in the agricultural sector. The average age of Queensland farmers is 56 years of age, and an average of 36 years involved in farming*. There is a relatively low turnover in the agricultural workforce compared to other sectors of the economy, and entry rates are correspondingly lower.

Farm businesses represent complex, multi-million dollar investments so the barriers to entry into farming are significant. We need to reduce the barriers to generational change in agriculture to ensure that there is a continual infusion of new people and ideas to keep industry productivity growing. We also need to ensure that new entrants are supported so they are not set up to fail in the early years of their farming careers, given the greater income volatility in agriculture.

As a new entrant starting with limited capital, the vast bulk of Queensland that is likely to be more available is leasehold land, particularly term lease which is owned and leased by the State under the Land Act 1994 and which can never be upgraded in tenure. Land rent represents a significant ongoing cost, particularly in the early years of a business.

Recent amendments by the state government to assist succession by expanding exemptions from duty costs in the case of family farm transfers have been welcomed, however these currently only apply to transfers of farm businesses to individual recipients. Farmers often use family trusts or companies to protect their assets and to assist fair succession arrangements. Under current eligibility settings acquiring family trusts or companies have to pay transfer duty, potentially hundreds of thousands of dollars, which detracts from financial resilience or must be added to the debt levels of new entrants.    

Solutions that AgForce advocate:
  • Expansion of eligible activities for succession planning grants to include professional advice plus the costs of financial assessment and implementation of new business arrangements
  • To facilitate industry participation and successful succession AgForce believes that new industry entrants buying term leases be provided two years of rent relief
  • The extension of the exemption from transfer duty on intergenerational family farm and business transfers to include all family business models
*Source: Australian Bureau of Statistics, Farm Management and Demographics, Australia – 2015-16

Succession

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