Corporate & Commercial 24 January 2022

Wine: A Family Affair – Part Two

In our earlier article, Wine: A Family Affair, Part One, we discussed the importance of having an early plan for and regular reviews of business and personal succession planning.  Importantly, there are some concessions and grants for young farmers who may be seeking to take control of ownership of family farms or business operations from their parents or grandparents that you should be aware of.

In Part Two here, we will explore some of the options that may be available to you for consideration.

Options for duty concession and exemptions for farm property transfers

As part of any succession plan, is it important that you understand how access to certain concessions can assist families to retain more intergenerational profit within the family structures through succession planning, to grow and develop the farm and business for the benefit of the family.

Young farmer duty exemption/concession

The young farmer duty exemption is probably the most well-known duty exemption/concession available for purchase or transfer of farm land by a young farmer.

An individual who meets the requirements of the Duties Act 2003 (Vic) concession may receive an exemption (for property values up to $600,000) or a concession (for property valued between $6000,001 and $750,000) duty on the purchase of their first farm property.

Importantly:

1. A young farmer is a person under the age of 35 years at the date of the contracts who is purchasing the property with the intention of carrying on primary production activities (which includes vineyards);

2.  The exemption/concession is applicable where the young farmer’s partner or spouse is purchasing alongside the young farmer and will also be on title to the farm property;

3.  The duty exemption is also applicable to entities controlled by the young farmer, including a company or a trust (the shareholders/beneficiaries of which are limited to the young farmer and their partner); and

4.  The duty exemption cannot be obtained by any young farmer (or their partner or spouse) who holds or has previously either held farm land in their personal name or held an interest in an entity which owns or has previously owned farm land.

5.  As such, where a young farmer holds or has held shares in a family company which currently or previously held farmland, or is a capital beneficiary of a discretionary or fixed trust which holds or held farmland they will likely to be ineligible to receive the young farmers duty exemption.

Transfer of family farm duty exemption

Another option available in respect of duty for succession of a vineyard for farming families is the family farm exemption.

This exemption is available for the transfer of primary production property between parties with a familial link.  Unlike the young farmer exemption, there is no upper limit on the value of the property to be transferred to obtain the exemption.

Importantly:

1. The transferor can be a person, company or trust and the transferee can be a person or a trust (but not a company); and

2. If the transferee or transferor is a trust, then all beneficiaries must be relatives of one another – for example they must be parents, children, grandchildren (or other lineal descendants or ancestors), a spouse or partner, siblings, nieces and nephew and aunts and uncles.

As examples, families may consider utilising this duty exemption, in the case of land held in personal names, to a company or trust structure of which a child or another relative involved in the succession plan is a controller or into the personal name of a child or other relative direct.

Take away points

In summary, the key take away points are:

1.  A succession plan that will work best for your family and winemaking / winery business is dependent on your family circumstances, there is no one size fits all approach;

2. You should regularly review your succession plan, to ensure it still fits for your family, particularly when you have future generations involved in the business or farm;

3. Communication within the family is key to ensuring that a long term succession plan for a winery or vineyard is successful; and

4. Involve your professional advisors in any succession planning discussions or reviews, as they are best placed to assist you to consider options, including any concessions or grants available.

Laura Shandley.
Laura Shandley Lawyer Corporate & Commercial | Wills, Estates & Succession Planning View profile
Tom White.
Tom White Principal Corporate & Commercial View profile
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