Succession planning imperative for small businesses: ICA

Regional small businesses cannot underestimate the importance of succession planning, as the final test of their business acumen, delegates at the Institute of Chartered Accountants Country Congress were warned yesterday.
Speaking at the Institute's three-day congress, entitled 'Big Issues, Small Business', Kathy Sims, Rural Skills Development Manager, NSW Farmers Association, addressed the dilemma frequently faced by regional business owners of having one significant and indivisible asset and more than one successor.
"Whilst there is no one single measure of what is fair," Ms Sims conceded, in the handing over of a business, "there are a number of measures that can be taken to make the process more equitable," she advised.
These measures include considering return for labour invested in the business, the needs of the older generation in a family business, particularly that of a surviving spouse, as well as the viability of a succeeding generation.
"Succession planning is the last test of a successful business owner," said Ms Sims. "Whilst stress is usually associated with the transfer of assets, it can just as similarly occur with the transfer of management".
To overcome the trial of succession planning, particularly for rural businesses, delegates to the Institute's congress were advised by Kathy Kelly, FCA, Boyce Chartered Accountants to consider the tax implications of undertaking a family business restructure.
"Choosing the most suitable structure is the first consideration," Ms Kelly said. "Access to the small business CGT concessions is paramount, however other issues must also be factored in".
Such considerations when undertaking a family business restructure include:
-  Rollover relief for trading stock and plant
- CGT implications of any change
- Future access to small business CGT concessions
- Joint and several liability
- Access to company rate of tax
- Continuity implications if an individual is to die
- Implications on transfer for stamp duty and access to intergenerational farming exemptions
The Institute of Chartered Accountants recently called on the government to amend current tax legislation relating to succession planning, specifically Division 13A*, in an effort to encourage small business owners to secure potential successors.


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