FOR RETIRING FARMERS AND THEIR FAMILIES
What to ask your solicitor and accountant before you share farm
By Sam Marwood
Before you engage anyone, filter the adviser. You want an agricultural accountant, and a solicitor who has done farm transitions. A suburban conveyancer and a general tax accountant are the wrong tools. Share farming has technical edges a generalist won't know to look for.
Then put these questions about the document to them before you sign.
For your solicitor
- Does this agreement create a partnership, and what in it prevents that?
- Am I an independent contractor, an employee, a tenant or a partner under this document and the law of my state, and what turns on the answer?
- Who is liable if the other party's business fails, or if something goes wrong on the farm?
- What does the document say about who controls the day to day work, and does that description match what we actually intend to do?
- How does either of us end this, and what happens to the standing crop or the stock when we do?
For your accountant
- How is my share of the income treated, and how is my share of the costs deductible?
- What are the GST implications of the split we've proposed?
- Do we need separate entities, and what does running them cost each year?
- If we build a livestock pathway into this, what happens on each step as the shares change?
- How do I finance my share of the inputs when I have no land to secure it against?
When the advice pulls in different directions
You may get different answers from different professionals, and it's not because one of them is wrong. Each looks at the farm through its own lens. A solicitor optimising for liability and an accountant optimising for tax will pull in different directions.
Resolving that is your job, against what you and the other party actually want. Say what you want out loud, to both of them.
Why these questions
These questions exist because a sharefarmer is usually not an employee, and because a loose agreement can be treated as a partnership. Read that here: Is a sharefarmer an employee?.
Read more: What goes in a share farming agreement and What kills a share farming arrangement?.
This is general information, not legal or tax advice.
The full guide, Ageing on Farm, is free at cultivatefarms.com/resources.
You can build your own plan at cultivatefarms.com/plan.