Tax Lawyers Sydney Explain Family Law Property Settlement Issues

Family law property settlements have become increasingly common. Unfortunately, there are many possible duty and taxation issues that might pop up that neither spouse has given much thought about if they haven’t consulted with a tax litigation lawyer. Thankfully, the leading solicitors Campbelltown has to offer are here to help and explain a few common issues that can stem from family mediation.

Capital Gains Tax

Capital Gains Tax (CGT) is applicable to all properties bought on or after 20 September 1985. Taxation lawyers Sydney locals can trust will tell you that CGT is payable on the net capital gain that is made on either the sale, transfer or disposal of the property from one person to another.

One scenario that occurs fairly often regarding CGT is when a couple has two properties of the same value, such as a home and an investment property. If they agree to let each one keep a property and then split up all additional assets evenly, then they might believe that they have achieved a fair division. However, the issue of CGT arises if one of the properties, let’s say the investment property for this example, were purchased after 1985. The spouse with the newer property may have a CGT liability if they choose to sell it in the future, while the spouse with the property bought before 1985, the house, is in a better tax position. In fact, if they choose to sell the house, a tax litigation lawyer can have them claim the CGT main residence exemption for part or even all of the net capital gain.

As the top tax lawyers Sydney has will tell you, it’s not just houses that have CGT. This tax can also apply to other assets, such as shares.

Trusts

Another issue that the customers of the leading taxation lawyers Sydney wide commonly see is that a spouse can make changes to the deed of a family trust after a property settlement is decided after family mediation.

Depending on what changes are made, and the original terms of the trust deed made by a tax litigation lawyer, a resettlement of the trust can be triggered. That happens when a substantial change occurs to the point where the trust is effectively a new one, which can result in duty and CGT consequences that the best tax lawyers Sydney should handle

When making changes, it’s best to get in touch with the best solicitors Campbelltown has to offer as there are specific changes that won’t cause a resettlement. These include removing the other spouse as a beneficiary from a family trust. However, it must be noted that CGT and duty may still apply.

Companies & Shares

Many couples that run a business together will have each spouse as a director that holds an equal number of shares. During a property settlement, it’s common that the leading tax lawyers Sydney wide will suggest that one spouse takes over the business, while the other steps down as a director and transfers the shares they have over.

If the transfer of shares is small enough then it might not cause any duty or taxation consequences. However, you should check as adverse income tax issues can still occur. For example, if a property is transferred during a property settlement, a company can be deemed to have paid an unfranked dividend to the spouse receiving the property and face consequences as a result. In that case, the spouse will have to include that dividend in their taxable income, which is why you should always have a taxation lawyers Sydney on hand for family mediation.

These situations are all too common and it’s exactly why you should be getting independent tax litigation advice while negotiating or finalising a property settlement. If you are in need of family mediation after a relationship has ended, get in touch with the top tax lawyers Sydney has to offer. We’re happy to help you during these difficult times and get you on track to a brighter tomorrow.

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Coleman Greig Lawyers Joined: March 24th, 2020