Global Daily Tax News, Australia Updates Guidance On Succession Planning, (May 29, 2025)

The Australian Taxation Office has released updated guidance for privately owned and wealthy groups on succession planning.

The agency advised groups to establish a succession plan and review it regularly, including when there are changes to family relationships, an unexpected illness, or other alterations to the business structure or operations.

It highlighted that groups should retain documentation to support transactions with a tax effect and obtain a valuation, seeking professional tax advice where necessary.

Announcing the new guidance, Louise Clarke, Deputy Commissioner for Private Wealth Client Experience, said: "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. 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."

"Having a sound tax governance framework in place will make it easier for you to manage tax issues associated with succession planning and reduce unintended tax consequences. You should also consider the wider tax implications for the next generation."

The updated guidance warns groups that the following situations will attract the agency's attention:

• entities failing to recognize a capital gains tax (CGT) event happened where they have restructured or transferred an asset;

• entities incorrectly applying tax concessions or rollovers;

• entities adopting complex structures or entering into an arrangement to access tax concessions or rollovers that are not otherwise available;

• entities failing to review the pre-CGT status of assets after an event that affects the beneficial ownership of such assets;

• transferring wealth through loans, payments or forgiveness of debt and failing to consider the application of Division 7A;

• the use of trusts where:

  • there are amendments to the trust deed, such as changes to the trustee or appointor, adding or removing beneficiaries, and amending the vesting date;

  • trusts have made family trust elections or interposed entity elections, and are distributing outside the family group; and

• entities inappropriately using self-managed super funds to access a lower rate of tax.