The People in Dairy

Retirement income strategies

There are many ways dairy farm owners can move out of control and ownership of their farm business. These can vary from appointing an employee or family member to hand over some responsibilities, engaging a share farmer, leasing or sale of the farm.

Each of these has varied implications for income which ultimately is the priority for people as they move out of work and into the next phase of their lives. For some it will be a chance to pursue another career or business opportunity which may mean that a complete sale of all stock and land is the priority. Alternatively it may be that they are approaching a phase of their lives where work is no longer a priority. They will need an income from the investment of their assets either still in the farm or elsewhere.

Keeping the farm

If the farm is kept, income may be generated from:

  • wages;
  • drawings;
  • profits;
  • director fees;
  • share farming proceeds;
  • converting the farm to another enterprise such as beef or heifer rearing;
  • lease income;
  • other investments;
  • superannuation (download on pension streams from superannuation funds here);
  • social security;
  • family support.

The change involved in moving away from control and ownership is not simple and for many, the options are difficult to choose. This often results in a deferral of a decision which may have detrimental impact on those involved. Using the support of a trusted adviser, accountant, lawyer, facilitator or financial planner can assist with this process.

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Additional issues to be considered in retirement include

  • Taxation with respect to:
    • primary producer status;
    • gifts to charity;
    • roll over of capital assets;
    • capital gains tax exemptions;
  • social security;
  • trust cloning;
  • insurance;
  • special disability trusts.

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For more information on these retirement strategies read additional retirement issues
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