Succession planning is the process of planning and documenting a client’s exit from a business when they either sell their interest, retire and transfer their interest to the next generation or cease to be involved in the business for other reasons such as illness or incapacity.
A successful succession plan should:
1. Protect the client after they exit the business;
2. Ensure the people who take over the client’s interest have the skills required to continue to effectively run the business;
3. Consider all tax implications on the sale/transfer including the GST treatment, capital gains tax and whether the small business concessions apply;
4. Consider whether there are any duty concessions available on the transfer such as the intergenerational transfer of rural land exemption;
If the succession plan is for a family business and only some of the next generation is taking over the business, how the needs of the family members not involved in the business should be addressed.
Author: Amanda Tully
This article is general information only and should not be relied on without obtaining further specific information.