Succession planning

Succession planning and private groups

For most private groups, succession planning may involve:

• preparing for the sale of your business, or
• planning to transfer control or wealth to family members.

We understand that every private group is different and there is no 'one size fits all' approach to succession planning. It may include restructuring, realising assets, retirement planning and estate planning.

A sound tax governance framework can help you manage tax issues arising from succession planning. We recommend that you put a succession plan in place. You should review your succession plan regularly, particularly when circumstances change. The size of your private group, business activities and structure will mean that every succession plan is unique.

Though succession planning may not have an immediate tax impact, it's important to include tax considerations in your plan. You may also need to consider the tax consequences for others that may be impacted by your succession plan, for example the next generation. This will reduce the risk of unintended tax consequences when implementing your plan.

We encourage you to:

• put a succession plan in place and review it regularly
• be aware of potential tax issues that may arise from succession planning and what attracts our attention
• make sure you have documentation to support transactions that may have a tax effect now or in the future, such as
  • changes in ownership interest (including rights to income, capital, and voting)
  • acquisition of assets, disposals and restructures
  • establishment or winding up of entities or businesses
  • loans, payments or debt forgiveness and guarantor arrangements to related entities
• obtain a valuation if required – see Market valuation of assets
• consider the impacts on your succession plan if circumstances change. For example,
  • changes in family relationships such as marriage or relationship breakdowns
  • unexpected life events such as illness or new family members, or
  • other changes to your business structure and operations.

You should seek advice from a tax adviser if you are unsure of the tax consequences of your succession plan or the tax treatment of specific transactions.

Engage with us

You may wish to engage with us for advice directly when tax issues are more complex and require certainty.

You can also obtain tax certainty on significant commercial deals (for example, restructures and sale of business or business assets) through early engagement and pre-lodgment agreements.

More information

For more information, see:

• Transferring your business to family members
• Exiting a business
• Retirement planning
• Estate planning