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Parties to family law proceedings slugged with unexpected tax bills


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 specialises in tax advice, particularly in complex tax litigation and tax audit matters. He has extensive experience in negotiating and settling tax-related disputes, with an emphasis on achieving efficient and commercial outcomes for his clients. Mark regularly advises clients on various tax structuring and compliance issues in a range of areas, under both federal and state-based revenue laws. He also advises clients on various other legal issues, including financial and reporting obligations, and compliance with corporate and competition laws. Mark has been a member of The Tax Institute's Professional Development Committee in Victoria since February 2015. He holds a Bachelor of Laws and a Bachelor of Commerce from La Trobe University, and is currently completing a Master of Laws at the University of Melbourne. - Current at 26 July 2017
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