Parties to family law proceedings slugged with unexpected tax bills
Source: Taxation In Australia Journal Article
Published Date: 1 Feb 2014
Under the Family Law Act 1975 (Cth), as part of property settlement proceedings in divorce, a court may order a private company, or a party to the matrimonial proceedings to cause the private company, to transfer money or property. This article considers the tax consequences of such transfers in light of a recent draft taxation ruling from the Australian Taxation Office (ATO). In the author’s view, the draft ruling represents a reversal of the ATO’s previous treatment of such transfers.
The article discusses the ATO’s changed attitude, and recommends that parties to matrimonial proceedings carefully consider the likely tax implications. Directors of a private company affected by property transfer orders should consider whether any proposed orders will affect the solvency of the company, the tax treatment of any payments to be made, and any possible conflict between their duties as directors and their interests as parties to matrimonial proceedings.
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Details
- Published By: Mark Gioskos FTI
- Published On:1 Feb 2014
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