Wealthy privately-owned groups have seen an increase in unexpected tax consequences as the ATO firms on succession planning regulations.
ATO Deputy Commissioner for Private Wealth Louise Clark urges that private groups carefully consider their succession planning practices, as unexpected tax consequences significantly increase.
“This is often a result of private groups failing to adopt effective tax governance,” Clark says.
“Considering the tax consequences of succession planning should be a priority for private groups, particularly where they’re preparing to sell a family-controlled business or planning to transfer control or wealth to the next generation.”
Clark says that an ageing demographic of business owners and entity controllers has led to an increase in succession planning activity, with many entities making errors.
“Even when a controlling individual isn’t looking to retire or step back from the day-to-day operations of the business in the immediate future, they should have a plan in place for their succession, and the tax implications should be front and centre.”
“We know that every private group is different, and each succession plan will be unique. That’s why our refreshed information provides guidance for all private groups. A key aspect is making sure you have sound tax governance.”
The ATO has released refreshed guidance on succession planning obligations, aimed at helping wealthy private entities achieve a smooth succession transition without incurring unwanted tax consequences.
If you’re business is going through a leadership transition or looking to develop a succession plan, Optima Partners can help. Our team of experienced business advisory accountants can help you get the most out the transition and avoid any unwanted consequences.
