You’ve built your family business with passion and perseverance, but, planning for its succession can feel daunting. You likely have concerns about accurately valuing your legacy, negotiating a fair transition, minimising tax implications and ensuring a smooth handover.
At Munro’s, our specialist business accountants are here to support and guide your family through every step of the succession process. We help you secure a future that honours your hard work, so you can confidently move on to the next chapter knowing your legacy is in safe hands.
The rest of this page is dedicated to providing you with an overview of some of the key steps you must take to successfully transition your family business from one generation to the next. These apply whether you are a family business in Perth, elsewhere in WA or across Australia.
Please feel come to get in touch to experience our professional succession planning help – please book a meeting or send an enquiry.
The Problem
Succession planning for a family business is about legacy, continuity and the hard decisions that come with planning for the next generation. Many business owners worry that without a proper succession plan, their life’s work may face disruption from internal disputes and unexpected tax burdens.
Our Solution
Our Perth-based business accountants understand that every family business is unique and utilise an approach where they listen carefully, identify your specific challenges and develop a personalised succession strategy that not only protects your legacy but also adds value to your business.
Key Benefits & Outcomes
✔ Setup for Success
✔ Existing Wealth Protected
The incoming owners need to come into a situation where they can survive and then thrive. They also need to be protected in case something goes wrong.
video key points
Presented by: Carl Hansen
video transcript
Taking on the ownership of a family business can be a rewarding yet challenging journey. At Munro’s, we understand the importance of ensuring that this transition is smooth and secure for both the current and incoming owners.
We first suggest you approach the process as if you were selling the business to an unrelated party. This perspective helps to objectively evaluate the business’s health and potential risks.
Start with a due diligence and financial health check. Assess the risks you’re inheriting. Is the business making adequate profits for its risk profile? Is it trending in the right direction? What does the cash flow look like? And importantly, what is the business worth?
Once you have these answers, turn your focus to the unique aspects of a family succession. Determine a fair price for the business. Consider how it will be funded – will it be through loans or gifts? Clarify payback expectations. Legal documentation is crucial to protect everyone’s interests.
As the incoming owner, setting up for tax success is essential. This includes selecting the best entity structure and completing the succession transaction in a way that mitigates taxes, including GST and transfer duty. Think ahead to how you can access CGT concessions in the future when you inevitably exit the business.
Protecting your existing and future wealth is another priority. Deploy basic asset protection strategies and consider advanced tactics for comprehensive security.
Successful succession planning also involves managing business reputation and relationships. This includes relationships with employees, vendors and family members.
You may also need to upskill for business ownership. Do you understand your legal obligations? How do the best business owners and managers operate today?
A well-crafted succession plan gives incoming owners confidence that their interests are protected and the business is set up to survive and thrive.
We’re here to assist you. Start with a free Get To Know Each Other meeting. You might also want to complete our spam-free Succession Planning Diagnostic accessible on our website.
We look forward to helping you.
✔ Security During Retirement
✔ Confidence in Long-term Business Success
The retiring owners will want to pass the business over with confidence in its long-term continuation, whilst also ensuring they have a financially healthy future that is setup in a tax-effective manner.
video key points
Presented by: Christine Prasetia
video transcript
When selling your business, particularly in family succession where it’s being taken over by your children, it’s essential to ensure the business’s long-term success and your financial stability for retirement.
Start by considering the best practices for selling to an unrelated party. This includes implementing systems and processes for smooth operation under new management, cleaning up financial records to reflect the actual business reality, and obtaining a fair market valuation.
Preparing the business for future success aids your children in managing it effectively. Understanding its worth is crucial for determining a fair price and for tax purposes.
To mitigate taxes, plan ahead, ideally a few years before the succession. There might be strategic actions required to significantly reduce your, and their, taxes.
For your long-term financial security, evaluate what you need for a comfortable retirement. Depending on the payout mechanism for the business, consider asset protection strategies to safeguard your wealth. Also, assess contributions to superannuation and how to manage it to maximise returns, mitigate risks and minimise taxes over the long-term.
Successions can occur in a single transaction or over a transitional period. It’s vital to balance the incoming owners’ need for early asset transfer with the retiring owners’ desire for continued ownership for security. A successful plan addresses these differing needs.
Estate planning is also critical, especially if not all children are involved in the business. Adjusting Wills may be necessary to ensure fairness and just outcomes for all children.
Ultimately, a successful succession plan provides confidence that you can enjoy a secure retirement while ensuring your children can run the business successfully for years to come.
We are here to help, starting with a free Get To Know Each Other meeting. You might also wish to complete our spam-free Succession Planning Diagnostic available on our website.
We look forward to assisting you soon.
✔ Bare Minimum Income Tax & GST
✔ Bare Minimum Transfer Duty
Transferring assets and businesses during succession triggers taxable events. Often there are subtle nuances that require forward planning and implementation well in advance to take advantage of whatever tax or duty concessions there may be to legally minimise the tax burden.
video key points
Presented by: Rama Yudhistira
video transcript
Some business owners may not realise this, but there can be severe tax and duty consequences upon transferring your business to the next generation.
Some of these tax consequences may involve:
The good news is, if you adequately plan ahead, you and the next generation shouldn’t get a rude shock from an undesirable tax or duty bill, and you may in fact be able to substantially reduce them too.
I’ll share some brief examples of successful succession planning to explain further.
The first example involves a long-running family business with a uniquely historical company structure.
This family plans to sell some valuable assets and naturally want to reduce taxes as much as legally possible. As their advisor, we identify the small business CGT concessions as a potential way to significantly reduce taxes. However, there’s a problem, related to the historical company structure.
Thankfully, both the client and we have been proactive, and the sale is not imminent. We are able to implement changes several years before the sale.
This forward planning and execution allow the family to become eligible for the small business CGT concessions years down the track. It is a fantastic outcome for them with substantial tax savings.
This second example involves a family farm.
As is common in farming families, when the children have been working on the farm for several years, at some stage they want to have some assets in their name.
The parents are happy to transfer part of their farmlands to their children while they are alive. The parents tell us about their intentions, which allows us to consider the potential tax implications and begin to explore potential tax saving opportunities.
In this example, the family farm is in a unique business situation. Unlike most years, where revenue exceeds $2million and disqualifies them from the small business CGT concessions, the projected revenue for the current year is below the $2million threshold. This means that if they act promptly they should be able to access the very favourable tax concessions.
In reality, it wouldn’t be as simple as this. Rather, we’d have to, amongst other things, look closely into the legislative definition of “aggregated turnover” to confirm eligibility.
Thankfully, in this example, we are very pleased to inform the parents that they are in a rare position to access the Small Business CGT Concessions and save substantial amounts of tax.
Further, we also carefully analyse the situation with respect to both Transfer Duty and GST. Consequently, we help them structure the transfer in such a way that they are free from both Transfer Duty and GST.
If you are considering passing on your business to the next generation, please take the required time to forward plan.
Ideally, do this a couple or more years before succession in order to allow sufficient time to implement what may be necessary to legally minimise your taxes. We’re here to help if you need us.
✔ Family Constitution
✔ Professional Support
A critical concern when planning to pass your business/wealth down to sons and/or daughters is that they might not be able to preserve and grow it, or family disputes might erode it.
video key points
Presented by: Saul Segal
video transcript
Transcript available on the Wealth Generation, Protection & Succession for Families page.
First Session is FREE (incl. GST)
Upskilling Event for Business Leaders
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Claims of being a ‘Top 2% ranked Australian Accounting Firm‘ (and similar claims) are based on two separate assessments conducted by Munro’s on 9-10 August 2023 and 1 December 2023. The ranking is derived from a comparison of the total of each accounting firm’s overall star rating multiplied by each firm’s quantity of reviews as shown on Google Maps. A total of 4,235 Australian accounting firms listed on Google Maps were identified for the earlier assessment, and a total of 4,301 for the latter assessment, which may not represent a complete list of Australian accounting firms. Munro’s claims are based on Munro’s best estimation and represent a snapshot collected at the time of each assessment. If the assessment was to be conducted today, then it is likely that Munro’s ranking would have changed – Munro’s may or may not be in the Top 2% today. Also, the methodology does not account for other potentially relevant factors such as quality of service, expertise, or client satisfaction beyond Google Maps reviews.
video key points
Presented by: Drew Pflaum
video transcript
In December 2023, we conducted a review of Australian accounting firms on Google Maps, based on star rating and quantity of reviews.
Out of the 4,301 Australian accounting firms we identified on Google, Munro’s ranked number 44, placing us in the Top 2% of Australian Accounting Firms. We’re thrilled to share this fact with you and share those reviews on our website. We’d also like to thank all our clients who left us those wonderful reviews.
Thank you.
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