Dr Brett Davies’ thesis –
Estate planning manual –
Business Succession Planning
Question:
Dear Dr Davies, I am a financial planner specialising in business risk. I was hoping that you would make available your PhD thesis on the taxation of business succession planning insurance.
Answer:
I am happy to do so. You can read it at the link above. It is about what happens when a small business co‐owner dies or suffer from a disability and is unable to continue to work. The remaining owners may use the proceeds of life, total & permanent disability or trauma insurance to fund the purchase of the outgoing owner’s interest. The thesis comments on the challenges in developing an insurance‐funded business succession plan, particularly concerning taxation consequences. Based on benchmarks, my research contends that the legislation and its implementation through the Australian Taxation Office are imperfect and ambiguous. I suggest reforms to alleviate inconsistencies and deficiencies in the current taxation system to ensure greater certainty and fairness. I am very happy to share it. The thesis took 3 years, full time, to write – and I hope it leads to reform.
I am concerned that small business can’t take on the ATO. The ATO does a lot of things that are wrong. While larger companies have the power to take the ATO on, small business can’t afford to ‘buck the system’. We end up having to take whatever the ATO states as gospel. I hope my research will change this.
About half of the AAT hearings that we have been involved in are lost by the ATO. We need to have only one master – that is the legislation set by the Federal and State governments. The ATO is a public servant. We do not elect the ATO. It should obey the law, not create its own law.