Why Succession without Structure can be Costly
As we approach June 30, the ATO has just issued a timely reminder for private and family-owned businesses: poor or reactive succession planning can lead to significant, and often unexpected, tax consequences.
According to Louise Clark, Deputy Commissioner for Private Wealth at the ATO, the tax office is seeing an increase in succession activity as business owners prepare to sell, retire, or transfer control to the next generation. However, many are doing so without a clear plan or proper tax governance in place.
The result? Unintended tax liabilities that could have been avoided with earlier planning.
Succession planning is more than just identifying who will take over the business. It’s about understanding the financial and tax implications of that transition - whether it’s a sale, a restructure, or a generational transfer of wealth. Without a structured approach, businesses risk undermining the very legacy they’ve worked hard to build.
The ATO has released updated guidance to help private groups navigate this process, emphasising the importance of:
Establishing a formal succession plan
Reviewing the plan regularly
Considering the tax consequences of each decision
Seeking professional advice early
At Hood Sweeney, we work closely with clients to ensure their succession strategies are not only commercially sound but also tax-effective. We help business owners understand the broader implications of their decisions and put the right structures in place to support a smooth transition - whether that’s now or in the years ahead.
Even if retirement isn’t on the immediate horizon, having a plan in place, and reviewing it regularly, can help avoid costly surprises and ensure your business is positioned for long-term success.
If you’re thinking about succession, now is the time to start the conversation.
Contact one of our accredited Family Business Advisers.