Why Rural Succession Planning Has Become More Urgent
- Jun 18
- 10 min read
Succession planning has always been one of the most difficult conversations for rural families.
Depending on the family, it may be happening around the kitchen table, in an adviser’s office, or not happening at all.
What has changed over the past 12 months, and accelerated through the first half of 2026, is the pressure on the timing of those conversations.
Bullagreen is seeing movement across relevant succession matters. Conversations that families may have deferred for years are being brought forward, with one proposed Budget measure becoming a significant trigger.
Important informationThe measures discussed in this article were announced as part of the 2026–27 Federal Budget but have not yet been legislated.The proposals, commencement dates, valuation requirements, exclusions and transitional arrangements may change through the consultation and legislative process.This article provides general information only. Rural families should obtain independent tax, accounting, legal, valuation and finance advice before making any succession, ownership, asset-transfer or lending decision.
The pre-1985 rural property issue
For more than 40 years, Australia’s capital gains tax framework has treated assets acquired before 20 September 1985 as being outside the capital gains tax regime.
This original grandfathering has meant that pre-CGT assets have remained exempt from capital gains tax.
Under the measures announced in the 2026–27 Federal Budget, that treatment is proposed to change from 1 July 2027.
The proposed framework would preserve the exemption for gains accruing up to 30 June 2027.
Gains accruing from 1 July 2027 onwards would then become subject to the proposed new framework, including:
Cost-base indexation
A proposed 30% minimum tax on net capital gains
The final treatment will depend on the legislation ultimately enacted.
Why a 1 July 2027 valuation may become important
Under the proposed framework, a valuation as at 1 July 2027 would be required to establish the boundary between the historical exempt gain and any future taxable appreciation.
The Bullagreen Brief identifies two possible approaches:
A market valuation
An apportionment formula supported by ATO tools
From that point, appreciation arising after 1 July 2027 may be treated under the proposed new capital gains tax framework.
For rural families that do not complete a transaction before the proposed commencement date, the quality of the valuation may have long-term implications.
A defensible valuation supported by appropriate evidence may establish the cost-base boundary for future transactions.
A poorly supported valuation may create uncertainty or risk for years to come.
The final valuation requirements and accepted methodologies will depend on the legislation and guidance ultimately issued.
Why rural families may be affected more significantly
Pre-1985 ownership of working agricultural land is common across rural Australia.
Many rural properties have remained in the same family for three, four or five generations.
These properties are not simply passive investments. They are operating businesses that have been worked, developed and transferred across successive generations.
The capital base may have been assembled through several historical layers.
Already-taxed income
The funds used to acquire the property and complete subsequent improvements may have come from income that had already been taxed at the marginal rates applying at the time.
Death duties paid on earlier transfers
Federal estate and gift duties applied in Australia until 1 July 1979.
State death duties continued for different periods across the states:
Queensland abolished its duty in 1977
South Australia and Western Australia abolished their duties in 1980
Victoria and New South Wales abolished their duties in 1981
Tasmania abolished its duty in 1982
For rural properties transferred between generations during the twentieth century, death duties may already have been paid.
The financial effect of those duties may still be reflected in family balance sheets through reduced working capital, postponed improvements or debt used to fund the transfer.
Decisions made under the existing grandfathering framework
When capital gains tax was introduced in 1985, pre-existing assets were placed outside the new system.
Families have made ownership, investment and succession decisions for more than 40 years on the basis of that treatment.
The proposed measures would change the treatment of appreciation arising after 1 July 2027.
They would not, based on the Budget announcement, retrospectively tax the historical gain arising before that date.
Why succession matters are moving now
The proposed 1 July 2027 commencement date is creating a shorter planning runway.
There is no requirement for every rural family to complete a sale, transfer or succession transaction before that date.
However, families with an existing transaction or transition already in progress may need to consider whether the proposed commencement date affects their planning.
Transactions completed before 30 June 2027
Based on the announced measures, a transaction completed before 30 June 2027 would continue to operate under the existing rules.
Where a pre-1985 asset is already likely to be sold or transferred, the timing question may therefore become material.
This does not mean a transaction should be brought forward solely to achieve a particular tax outcome.
The wider implications may include:
Stamp duty
Lender requirements
Family control
Retirement income for the outgoing generation
Working capital for the incoming generation
Business cash flow
Ownership of operating assets
The readiness of the next generation
Tax is one part of the decision. It should not be the only part.
Families not transacting before 1 July 2027
For families that do not intend to complete a transaction before the proposed commencement date, a properly supported valuation as at 1 July 2027 may become important.
That valuation may establish the boundary between:
The historical gain proposed to remain exempt
Any appreciation arising under the proposed new framework
The need for a valuation does not itself mean the family must sell, transfer or restructure the property.
It may simply become an important record for future succession or sale decisions.
The decision to transition early is not straightforward
Bringing a succession transaction forward may preserve access to the existing capital gains tax framework if the proposal proceeds as announced.
However, the tax position must be considered alongside the broader consequences.
These may include:
Whether the next generation is operationally ready
Whether the incoming generation can service the required debt
Whether the outgoing generation will receive sufficient retirement income
Whether the property or business can support both generations
Whether off-farm family members have expectations over the family balance sheet
Whether the current operator is ready to relinquish control
Whether the legal and finance structures are ready
Whether stamp duty or other transaction costs apply
A tax-efficient structure is not necessarily a workable family transition.
The trust restructure window may run alongside the CGT change
Many pre-1985 rural properties are held through family trusts.
The Budget measures also include a proposed three-year rollover relief window from 1 July 2027 to 30 June 2030 for restructuring out of discretionary trusts.
For families considering both a succession transaction and a trust restructure, sequencing may become important.
The proposed windows do not necessarily align perfectly.
A family may therefore need to consider:
The proposed capital gains tax commencement date
The proposed rollover relief period
The existing ownership structure
The lending facilities secured against the property
The employing entity
The intended succession outcome
The order in which any changes would occur
These issues should be considered with appropriately qualified tax, legal, accounting and finance advisers once the final legislation is available.
What Bullagreen is doing on relevant succession matters
Bullagreen Rural Partners is applying a structured pre-1 July 2027 review process to relevant succession matters involving pre-1985 rural property.
The process outlined in the Bullagreen Brief includes three initial steps.
Step one: Confirm the pre-1985 status
The historical title and ownership position should be confirmed with supporting evidence.
This may help establish whether the asset qualifies as a pre-CGT asset and how it has been held or transferred over time.
Step two: Compare the potential timing outcomes
The difference between completing a transaction under the existing framework and transitioning into the proposed new framework may need to be modelled.
This should not be treated as a recommendation to transact.
It is a way of ensuring the family understands the potential consequences before making a decision.
Step three: Coordinate the adviser team
The accountant, solicitor, valuer and, where relevant, the lender should be brought into one coordinated conversation with the family.
The aim is not to push the family towards a transaction.
It is to ensure the family has access to the right information and expertise while there is still time to consider its options properly.
Other pressures affecting rural succession
The pre-1985 capital gains tax issue may be a trigger, but it is not the only pressure affecting rural succession decisions.
Rural land values remain elevated
The Bullagreen Brief notes that rural land values across New South Wales and Queensland remain at or near historic peaks.
This means the value attached to a next-generation buyout may be higher in absolute terms than it has been previously.
The debt required to fund the transition may also be greater.
A higher property value may strengthen the family balance sheet while making the practical transfer of the business more difficult to fund.
Interest rates are increasing the cost of succession debt
The Bullagreen Brief refers to a cash rate of 4.35% and a higher-for-longer interest-rate environment.
In that environment, the serviceability position for a succession transaction involving $5 million to $15 million of debt may be materially more difficult than it was 18 months earlier.
Some transactions may require alternative or staged arrangements, including:
Vendor finance
Staged ownership transfers
Deferred payments
Gradual transfer of operational control
Different lending or security structures
The suitability and availability of any arrangement will depend on the circumstances of the family, the business and the lender.
Any finance remains subject to eligibility, lender criteria, assessment and approval.
Proposed trust tax changes add another layer
Where a rural property is held in a discretionary trust, the proposed 30% minimum tax from 1 July 2028 and the proposed three-year rollover relief window add another set of considerations.
A family dealing with:
A pre-1985 rural property
A discretionary trust
A succession transaction
Existing lending facilities
Multiple family beneficiaries
may face a more complex decision than a family dealing with any one of these issues in isolation.
The structure, timing and commercial outcome may need to be considered together.
Family dynamics do not follow legislative deadlines
The most difficult part of many succession conversations is the human one.
Common issues identified in the Bullagreen Brief include:
An off-farm sibling expecting a share of the family balance sheet
A current operator who does not want to relinquish operational control
A next-generation family member who has worked in the business for years without a documented pathway
Different expectations about ownership, income and decision-making
An outgoing generation expecting retirement income from the transfer
An incoming generation expecting sufficient working capital to operate the business
These issues do not become easier simply because a legislative deadline is approaching.
However, a proposed legislative deadline may force a conversation that has previously been deferred.
That makes it more important to establish the family’s intent before attempting to design the structure.
What well-managed succession looks like
The active matters described in the Bullagreen Brief show four recurring features in stronger succession processes.
1. An early start
Families that begin the conversation three to five years before the intended transition generally have more options.
Those beginning from a standing start may face:
A narrower range of choices
Greater time pressure
Less flexibility in funding
Less time to resolve family disagreements
A greater risk of making structural decisions before the family’s intent is clear
Beginning early does not commit the family to a particular outcome.
It creates time to understand the available options.
2. A coordinated adviser team
A rural succession may involve:
An accountant
A solicitor
A finance adviser
A valuer
A family adviser or succession facilitator
Insurance and employment specialists
A coordinated process means each adviser is working from the same documents and the same understanding of what the family is trying to achieve.
Bullagreen’s role is to help coordinate that conversation rather than replace the specialist advice each professional provides.
3. Documented family intent before structure
The question of what the family wants should come before the question of which structure should be used.
The family may need to agree on matters such as:
Who will operate the business
Who will own the land
Whether control and ownership will transfer together
What the outgoing generation needs
How off-farm family members will be treated
Whether the business can support the proposed outcome
What happens if the next generation changes direction
A technically efficient structure cannot resolve an intent that was never clearly established.
4. A financial reality check
The financial position needs to be tested honestly.
The outgoing generation may expect the transaction to fund retirement.
The incoming generation may expect to take over a viable business with sufficient cash flow and working capital.
Both expectations may need to be supported by the same balance sheet.
A clear cash-flow model can help show:
What the outgoing generation may receive
What debt the incoming generation may need to carry
Whether the business can service that debt
What working capital remains after the transaction
Whether a staged transition may be more workable
Whether the intended outcome is financially sustainable
Finance modelling does not determine what the family should do.
It helps establish whether the intended outcome can work in practice.
The first step is starting the conversation
The proposed Budget measures have made succession timing more visible, particularly for families holding pre-1985 rural property.
They have not made the decision simple.
A family still needs to consider its people, property, operating business, debt position, retirement needs and long-term intentions.
The practical starting point is to establish:
What the family owns
How each asset is held
Whether the rural property was acquired before 20 September 1985
What succession discussions have already occurred
What each generation expects
What finance facilities are currently in place
Whether the numbers can support the intended transition
Which professional advisers need to be involved
The aim is not to force a transition before a proposed deadline.
It is to make sure the family has the information and time required to make a properly considered decision.
Want to begin the succession conversation?
James Brouff works with farming families, agribusiness operators and rural business owners across regional Australia, helping bring the right professionals around the table for complex finance, business structure and succession conversations.
To discuss your current succession position and the broader considerations that may need to be reviewed, reach out directly.
M: 0461 374 585 | E: james@bullagreen.au | W: bullagreen.au
General information only. This content does not constitute financial or credit advice and has been prepared without considering your objectives, financial situation or needs. Lending is subject to eligibility, lender criteria and approval.
Bullagreen Finance | Credit Representative 571331 | Australian Credit Licence 389328
The tax, trust, valuation, succession and legal information contained in this article is general in nature and should not be relied upon as a substitute for independent tax, accounting, valuation or legal advice.
The measures discussed were announced as part of the 2026–27 Federal Budget but had not been legislated at the time of publication. The proposed reforms, commencement dates, valuation requirements, exclusions, eligibility criteria and transitional arrangements may change through the consultation and legislative process.
Before selling or transferring an asset, restructuring a trust or business, changing an ownership arrangement, varying a finance facility or making a succession-planning decision, obtain advice from appropriately qualified tax, accounting, legal, valuation and finance professionals.
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