Succession Planning

14 April 2022

You have a successful farming business, but what happens if something happens to you? What plans do you have in place and what does your succession plan look like?


Your business is successful and you have assets, knowledge and skills to pass on, but when is the right time? Retirement is often when these issues are discussed but what about in the case of an illness, accident or death? Succession planning is important for both your business’ and family’s future. It’s important to start succession planning as early as you can so everyone involved knows what will happen and what is expected of them. Don’t be one of the 9 in 10 businesses who don’t have a succession plan in place.


A succession plan is simply the process where assets, knowledge and skills are transferred to the next generation. This process will include your family and can elicit strong emotions - who will run the farm or will it be sold if nobody wants to run it. The plan needs to be inclusive, outline how the transition process will take place, and be reflective of your wishes. It should be fair to everyone, agreed upon and updated if things change.


Informal discussions with family members prior to developing your succession plan can help prepare them for the transition. The needs and wants of the family and individual members can change over time, so it’s a good idea to be open, honest and transparent about everyone’s wishes. You’ll also want to consider where the business is at currently and your vision for the business. If you don’t wish to pass your farm onto your children, you should be upfront about this.


You should discuss your expectations for the future with your family and what the structure and obligations are for those who will take over. Consider getting a consensus so that the succession plan is inclusive and is about how the business will continue on – it's not just the transference of assets but about the people and how to manage the business. You should also consider how viable the business is overall – it needs to give you the lifestyle you want and if it isn’t, you need to consider what your options are.


If one of more of your children want to run the farm either by themselves or together, this needs to be communicated clearly and what they may need from the business. The earlier you know, the more you’re able to build the skills and capability in the next generation and train them to take over the business. For those children who are not taking over the farm, it could mean providing some other financial support such as with a home loan or a gift. You may also want to consider what (if any) sacrifice you make with regard to capital and security to help the next generation become established.


If no one wants to take over the farm business, consider partnering with other young people who are motivated and passionate about your business. Teach and upskill them with a view of passing the business onto them in the future.


It is important to receive specialised advice and reach out to someone with succession planning experience as well as your other advisors (lawyer, accountant etc) as they can help you clarify your vision for the business and put in place a strategy and structure to achieve this. Having a group of advisors who’ve been involved in your business for some time can make the transition much easier when it comes time to implement your succession plan, as they will know you and understand your business.


Things to consider are business profitability, business life cycle (good times and lean times) and it may only have assets at the time of transition.  Just looking at the accounts may not be enough but understanding the strategy and vision for the business gives a much better overview. You may have some hard decisions to make during the transition phase and your advisory group can be invaluable during this time. For example, the new generation will want to make their own changes but it can be sometimes harder than expected for the outgoing generation to hand over the reins and the advisory group can look at it from a different viewpoint.


Finding the best time to retire will be different for everyone but consider if it’s time to transition. If your business is anticipating growth, it might be a good time to transition to the next generation. Your experience and knowledge will always be valuable.


Succession planning can seem difficult but it is essential for the future of your business. If you haven’t already started, then the time is now, while the choice is yours. 


Gunson McLean can help you with all aspects of succession planning, from identifying where you are at in the process, to helping you develop a plan for your farm business that is relevant to you as well as providing assistance with the structure of the advisory board. Our focus will be delivered with the aim of providing transparency and fairness for your family.

The art of delegation

11 August 2025
How often do you get to the end of a working day and wonder where the time went? Perhaps you never got to item 3 (or even item 1!!) on your to-do list. How can you solve this problem without working longer hours? The answer is very simple, but the art in the solution is where the gold is. The answer to free up time is to delegate more – either to existing team members, new people you recruit, or externally to outside contractors. However, if delegation were that easy, everyone would be doing it now, right? So, what is the art of delegation? We say art, because delegation is not an exact science; different approaches are needed depending on who the ‘delegate’ is. Time and effort are required to effectively pass on tasks to others. Often, the time the delegator needs to put in initially is greater than if they did the work themselves – that’s why so many people don’t delegate. The view that ‘it’s quicker for you to do it yourself’ holds you trapped and unable to be more productive and effective yourself. It also stops others from developing better ways to do things than you already know, i.e. if you teach them your way, then they can master that AND add their own value – two minds being better than one. Here are some essential principles to apply to help you to delegate (as opposed to abdicate!): Delegation Assess the task, issue to the right person and support - helps build trust and respect Be specific and crystal clear for greater communication Request they repeat back instructions, so you know you were understood, enabling higher productivity Set a time frame and request clarification that the task has been achieved, ensuring jobs are completed on time and are profitable Both parties to review - opens the door for future work Abdication Issue tasks to anyone and forget about it - shows distrust and a lack of respect Giving unclear and little information results in poor communication Don’t ask if you were understood - results in low productivity Don’t set a time frame – it can mean jobs are delayed and over budget Different expectations can result in disgruntled clients No review results in no future work Delegation is a skill to be learned; applying these principles consistently will ensure long-term success. “No person will make a great business who wants to do it all himself or get all the credit” – Andrew Carnagie Action list: Which tasks am I currently doing that I could delegate to others? What can I do with the time I free up? Who are the best people for me to delegate these to? (Make sure they want to do these as part of their career development). What is the best way to document what is expected and how it should be done? What support and review process is needed to ensure success?

Work vehicles? Stay on top of tax with logbooks

11 August 2025
Logbooks are useful records of business expenses relating to work vehicles and this is important when calculating what tax deductions you can claim. Depending on your business entity type, different tax rules apply when you use motor vehicles to earn income, and you might use a logbook to track expenses in different ways. Sole traders and partnerships can claim income tax deductions for motor vehicle expenses if the vehicle is used to help earn income for the business. If you don’t use the vehicle exclusively for business, you can’t claim 100% of vehicle expenses. You need to work out the business use of the motor vehicle to calculate what deduction you can claim. You can do this either by using a logbook to track actual costs or using a logbook over a test period to establish the average business usage. Companies are a bit different. Where company vehicles are used partly to earn income and partly for private use, vehicle costs associated with private use are liable for FBT. Companies can use logbooks to keep track of work-related costs and show either that the vehicles are work-related vehicles which don’t attract FBT where used for work purposes only, or that FBT is accounted for correctly where there is some private use of other vehicles. The logbook becomes a record of work-related use and of private use subject to FBT. Where a company restricts private use of the vehicle, a logbook is used as evidence that employees have complied with the restriction. Whatever type of business structure you have, we can advise you on keeping good records and understanding what you can claim.

Changes to KiwiSaver: How to get your business ready

11 August 2025
Major changes to KiwiSaver were announced in Budget 2025. The KiwiSaver voluntary savings scheme is aimed at helping New Zealand workers save for retirement or buy a first house. But with the rising cost of living, action was needed to make KiwiSaver fit for purpose and more fiscally sustainable as a savings scheme. How will these changes affect your employees and your small business? Let’s take a look at the details of these KiwiSaver changes. Changes affecting your employees First off, let’s outline how the initial changes announced in Budget 2025 will affect your employees and other Kiwi workers: Since 1 July 2025: Younger workers will qualify for government contributions: People aged 16 and 17 will qualify for government contributions, so long as they meet other eligibility requirements. Prior to 1 July 2025, members must be 18 or older to qualify. Government contributions to halve: The government KiwiSaver contribution will halve, reducing the maximum government contribution from $521.43 to $260.72 each year. High earners to lose government contributions: People who earn more than $180,000 of taxable income in a year will no longer qualify for government contributions. No change to 2025 government contributions: There’ll be no change to government contributions for the year ending 30 June 2025. These will be paid in July and August at the current government contribution rate. Changes affecting your small business Next, let’s lay out the KiwiSaver changes that will directly affect your business: From 1 April 2026: Employer contributions will rise to 3.5%: From April 2026, the default KiwiSaver contribution rates for both employers and employees will rise to 3.5% – up from 3%. Employees can choose to remain contributing at 3%: Employees who are members of the KiwiSaver scheme will be able keep their contributions at the current rate. They can apply for a temporary rate reduction from 1 February 2026, if they want to continue contributing at 3% from 1 April 2026. Employers can match the rate reduction: As an employer, you’ll be able to match your employee’s temporary rate reduction. Once your employee moves to a higher contribution rate, you’ll need to increase your employer contributions to the default 3.5% rate. Inland Revenue will notify you of this change. Younger workers will qualify for KiwiSaver contributions: People aged 16 and 17 will qualify for employer contributions. If they contribute to KiwiSaver from their wages, you will need to start making employer contributions. From 1 April 2028, the default contribution rates for employers and employees will rise again to 4% (up from 3.5%). Getting ready for the KiwiSaver changes These amendments to KiwiSaver could have a significant impact for your small business. Increased employer contributions will increase your payroll costs and stretch your cashflow, as will making contributions for younger workers in the 16 to 17-year-old age bracket. You'll also need to update your payroll software and processes, to ensure you’re making the correct contributions for the right people, at the right rates. 
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