MYTH: I want to retire. If I transfer my farm to my son now, there’ll be taxes. I’d rather wait until I pass away because then I know there won’t be any taxes.
FACT: You don’t have to wait. You can transfer your farm to your son now without any stamp duty payable by your son or any CGT payable by you.
The transfer of your farm to your son is exempt from stamp duty if the farm is transferred between family members and the land is used solely or dominantly for primary production. You must also be using the farming property in primary production immediately before the transfer, and your son must intend to continue using the farming property in primary production.
For example: Widower Henry is transferring his farm to his only child, John. The property consists of several lots of land which are all used for sheep and cattle farming. Because:
– the dominant use of the land is for the sheep and cattle farming business, the farming land is farming property;
– Henry and John are family members;
– Henry was farming the land immediately before the transfer; and
– John and his family will continue to farm the land after the transfer;
the transfer will be exempt from stamp duty.
Henry can retire in peace on his own home block (which he doesn’t transfer to John) and John has peace of mind that the farming land, which he has worked on since he finished high school, will be his and cannot be contested by Henry’s new girlfriend when Henry passes away.
If you are thinking of transferring your farm during your lifetime, have a chat with your accountant, who can also advise you on your capital gains tax position. There are a number of exemptions that could apply to you.
