Recently, I read a book by Cowell Clarke lawyers that is targeted towards advisors in the agricultural sector.

It’s a comprehensive publication full of practical information, written with non-lawyers in mind.

I am concentrating on a chapter that relates to inter-generational loan restructuring, which is essentially transferring ownership of land.

In any restructure, stamp duty is the elephant in the room.

Stamp duty is state based legislation and the rules do vary between states – SA generally has less onerous regulations than some other jurisdictions.

The authors contend that stamp duty can normally be reduced or eliminated, with forward planning and accessing the various concessions and exemptions available.

When any restructure is undertaken the big picture needs to be front of mind. There are opportunities to make multiple changes during one transaction.

An example is not just a simple transfer between generations but transferring land into multiple trusts and even involving a SMSF.

Another common reason to restructure is to transfer land out of entities that aren’t fit for purpose anymore, such as companies.

Another benefit of transferring land can be to reset the cost base of the land. Kicking the can down the road is all too common in relation to tax in farming businesses.

Dealing with issues when they arise is a better option.

The legislation is quite specific, and sometimes to get the desired outcome a two-stage process may be needed.

It may not be as simple as making one seamless transfer. This is where professional advice is vital.

The land in question has to be primary production in nature, this can get a bit grey around the edge if some of the land is not used for primary production purposes.

Another qualifier is that the transferee and transferor need to be related. In essence, the people that are the ultimate controllers of the various entities, need to be family members.

One tip the authors suggest is to submit the proposed transaction documents to the relevant state authority prior to executing the change. This sounds like a very sound risk mitigation strategy.

Once a transaction is completed and it’s found not to have the desired outcome, it’s very difficult to unscramble the egg.

If a trust sits on either side of the transfer, it seems abundantly clear that the trust deeds need careful appraisal to ensure there are no unintended consequences after the fact.

Given trusts are a common form of land holding entity, this amplifies this point.

As farming businesses grow in size and complexity, its more important than ever that professional advice is sought.

This can encompass many areas of farming operations, the most common are production related.

People can’t be an expert in all areas, and there are inevitably going to be things we don’t know.

This is very much the case for an agribusiness enterprise.

Most individuals have a group of people they trust around them.

It’s likely someone in this group will be able to point you in the right direction, you just need to ask.