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Parties to family law proceedings slugged with unexpected tax bills

Published on 01 Feb 14 by "TAXATION IN AUSTRALIA" JOURNAL ARTICLE

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.

Author profile:

Mark Gioskos FTI
Mark was admitted to practice in April 2012, and works in the Tax Practice at Thomsons Lawyers. His areas of practice include the taxation of trusts and other business structures, dispute resolution (particularly in the SME sector), residency issues, state taxes (including duty, payroll tax and land tax), CGT, GST, superannuation, competition law, and corporate compliance with regulatory obligations. Mark graduated with Bachelor of Laws and Bachelor of Commerce degrees from Latrobe University, and was awarded the Dean's Commendation in 2011. Current at 01 January 2016 Click here to expand/collapse more articles by Mark Gioskos.
 
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