The taboo talks some WA families should have as CGT uncertainty reigns
While uncertainty reigns over the federal government’s proposed changes to capital gains tax, research has found that most families are still hesitant to discuss money matters, especially difficult topics including inheritance and succession plans.
Latest research by the JP Morgan Family Wealth Institute suggests the biggest threat to some of Australia’s family fortunes may lie in conversations left unsaid at the dinner table.
It turns out that 70 percent of family members find it difficult to talk about family wealth, and one in five avoid having the conversation altogether until a crisis brings the issue to light.
But Garry Symonds, principal partner at wealth consultancy Fitzpatricks WA, said proposed capital gains tax changes had sparked new debate about inheritance and business transfer.
“I’m not sure we’ve talked about much else in the last two weeks,” he said.
“A friend of mine from a law firm sent me a briefing this morning on the tax reform that will amend the Treasury bill and be tabled in Parliament.
“Apparently it’s 160 pages, there’s a lot to go through. The hardest thing is not really knowing what the detail is going to look like.”
Currently, businesses with a turnover of up to $2 million and net assets of up to $6 million do not need to pay any CGT if the owner is over 55 and has owned the business for at least 15 years.
They are also taking an additional discount on top of the existing concession, increasing their CGT discount to 75 percent.
Capital gains are also exempt up to a lifetime limit of $500,000 if the gain is transferred to the retirement fund, with the ability to defer the gain for two years.
While the government is still considering possible exemptions to the proposed law, Symonds said recent research and discussions on capital gains had revealed the emotional strain of intergenerational wealth.
“There haven’t been any really major legislative changes in recent years, so it’s been a pretty stable environment that allows you to plan,” Symonds said.
“I don’t think the current uncertainty is doing much for business confidence.”
Symonds said his role required a more nuanced and relationship-focused skill set than other financial advisory roles and was built around long-term family strategy and continuity.
“Clients aren’t looking for smarter advisors, they’re looking for safer conversations,” he said.
“To earn the right to influence these decisions, you need to know their story and understand their values.
“The money side is 20 percent, the other 80 percent is family dynamics, communication, governance and decision-making.”
Symonds said it’s important to understand what money represents emotionally to different family members.
“Every client I’ve worked with at this level has come to me with the same question: Will my family be okay, not financially okay but actually okay,” he said.
“It’s a question that few in this industry are trained to answer, but it’s the only question that matters because it shapes whether wealth strengthens the family.”
