FOR RETIRING FARMERS AND THEIR FAMILIES

Can the farm fund your retirement? The money questions to ask first

For most farmers, the farm is the biggest thing they own. For many, it's the retirement plan as well.

So before you choose how to step back, get clear on what you need the farm to do for you. The answer goes a long way to deciding which option fits.

You don't have to sell everything

Selling up isn't the only way the farm can support you.

With a lease, a share farm or a partial sale, the land earns you an income while you keep ownership, or a share of it. You don't have to give up the lot.

Each option pays differently

Ageing on Farm lays out seven options for farmers stepping back, and each works differently on money.

A lease pays you rent. Lease to buy pays rent through the lease, then the agreed price if the farmer decides to buy. Vendor finance pays a deposit and then interest.

Some pay you over time. Some pay a sum at the end. Some leave your money in the farm until it is repaid. Which suits you depends on what you need.

What you need to live on

• Do you need the farm to fund your retirement? Or do you have other income, such as super, savings and shares off the farm, or your partner's income?
• How much will you need each year once you've stepped back? Put a real figure on it, not a hopeful one.
• How much do you need as cash, and how much as an income over time?
• Would you like to be bought out in the end, or are you happy with an ongoing income from the land?
• What does each option mean for your super?
• How would each one affect your Centrelink eligibility?

The tax questions

How you hand over the farm can change the tax you pay. These are worth raising early.

• What capital gains tax would apply if you sold or transferred the farm?
• Would GST apply to any part of it?
• Would changing the structure the farm is held in make a difference to the tax?
• What stamp duty applies in your state?
• Is your accountant a specialist in farm transitions, or a general accountant?

Questions first, then advice

These are questions, not answers, and this isn't tax or financial advice. The answers depend on your own numbers and your own family.

So take them to people who know farms: an agricultural accountant, a solicitor who specialises in farm succession, and a financial adviser.

Once you know what you need the farm to provide, choosing how to step back gets a lot clearer.

The full guide, Ageing on Farm, is free at cultivatefarms.com/resources.

You can build your own plan at cultivatefarms.com/plan.