In the second of a series of private wealth articles by ABL partners to be published in the AFR over coming months, tax partner Jonathan Ortner writes that what was once a relatively simple formula for passing on wealth to the next generation has become a maze of complex decisions with potentially severe tax consequences.
As Jonathan explains, there are important tax risks associated with succession planning, and the standout is not to rely on all-too-common myths and assumptions about what’s taxable.
For example, if you think a gift or loan is automatically tax-free, think again.
If you think there is no tax on death in Australia because we don’t tax estates or inheritances, you be surprised to know that in some circumstances an immediate income tax liability can arise upon death.
And if you assume an asset acquired pre-CGT is tax free, you may be in for a shock.
“With increasingly sophisticated data analytic tools and strengthening administrative powers, it is starting to feel like ATO commissioner Rob Heferen is sitting at the kitchen table while families try to nut out how to pass on hard-earned wealth.”
To read Jonathan’s article on how transitioning wealth and control can lead to a hefty serving of tax if not dealt with appropriately, click here.
