The Deal is Done – What Next? - The SA Estate & Business Succession Planning Day

Brett Zimmermann
Australian life expectancy has increased significantly over recent years and a person in their mid-fifties today can expect to live well into their eighties.

The biggest intergenerational transfer of wealth is due to take place over the next twenty years. Coupled with Australia’s ageing population practitioners face a period of huge opportunity, but one that is not without its challenges.

There are significant implications for business succession, with many business owners intending to postpone retirement. Often business succession involves structuring a means by which the next generation of leaders (family or otherwise) can work with a leader who wants to ‘cut back’ rather than retire.

At the upcoming Estate & Business Succession Planning Day, some of South Australia’s leading advisers and tax specialists will address the ‘real world’ issues and opportunities facing practitioners, with a focus on the unique environment they operate within in South Australia. Here we take a closer look at the session from Brett Zimmermann, CTA; ‘The Deal is Done – What Next?’

A Senior Associate with DW Fox Tucker Lawyers, Brett has worked as a tax lawyer since graduating in 1998 and has extensive experience in tax and commercial law and also lectures taxation law to both undergraduate and masters students at the University of Adelaide. Brett produces detailed commentary for Thomson Reuters, primarily in the area of capital gains tax and tax losses, and amongst others,was principle author of their original commentary on Div 149 – loss of pre-CGT status, Div 118-I – look through earnout rights, Subdiv 104-E – CGT events: trusts, and Schedule 2F – trust losses.

Brett told us “In my session my aim is not to provide all the answers for CGT related questions, however I hope to remind attendees of that which they might forget (or don’t know) to better equip them to ask the right questions and provide their clients with practical solutions to their CGT issues”. 
 
When a vendor decides to sell their business, or restructure ahead of a sale, a number of income taxation considerations come in to play. From the tax consequences on disposal to the continued pre-CGT status of “pre-CGT assets”, advisers need to be aware of the potential missteps that can cause their client significant costs.

Brett’s session looks at these potential traps, and covers the apportionment of capital proceeds between assets, access to rollovers and small business CGT concessions, as well as earnouts and pre-sale dividend stripping.

Brett says “CGT is not hard.  I like to present passionately and enthusiastically trying to turn the complex into ‘simple’.  I want to be able to present the topic in a manner that is not only informative but also engaging.”

“I would say that what I find people often forget are the historical application of Div149 and potential for CGT event K6 being triggered for pre CGT interests. It is often said that a pre CGT interest in a trust or company means ‘no tax on realisation’, however that cannot be automatically assumed. Pre CGT status in underlying assets may have been lost in prior year, or separate capital gain made on the realisation of the pre-CGT interest if the relevant underlying asset threshold is breached. This could mean a higher tax liability for your client, and a surprise to the client if you haven’t forewarned them of this possibility.  We must always manage our client’s expectations, limit our own exposure for misleading the client as to their tax position and if possible, mitigate that tax exposure.”
  
Brett has been a member of The Tax Institute since 1998. Involved in various committees and having facilitated on both a national and state level over the years, he was also part of the Barossa Convention organising committee.

Asked about his focus in this session, Brett said “I want delegates to leave better skilled to identify issues that might have an impact on their client’s business. There is no recipe for a perfect solution, however hopefully they’ll gain more knowledge to understand the different factors that can affect the business.”

Following a session from The Tax Institute’s SME Tax Adviser of the Year; Julie Van der Velde, CTA on ‘Setting the Scene’, the program looks in turn at preparing a business for sale, due diligence, superannuation, documenting succession arrangements, and valuations.


The SA Estate & Business Succession Planning Day takes place 15 September 2017, at the Adelaide Convention Centre. Find out more about the rest of the program on our website

You can also read what Julie Van der Velde had to say about her session that opens the event and sets the scene for the day in the post 'Impacts of our ageing population on business succession' here.

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