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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 specialises in advising on 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 also regularly advises on structuring and compliance issues under Federal and State based revenue laws, as well as other regulatory and administrative law matters, and in general commercial transactions. Mark is a Fellow member of The Tax Institute, and has been a member of The Tax Institute's Professional Development Committee in Victoria since 2015. He has written a number of articles published in professional journals, is a regular presenter at seminars and discussion groups, and holds a Master of Laws from the University of Melbourne. - Current at 02 June 2020
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