I recently read that there are an estimated 1 million trusts operating in Australia and as at December 2022, there were already in excess of 3.1 million registered companies. What follows from this is that it is increasingly common today to find that property settlements involve the division of interests in companies and trusts.
There are some specific considerations that apply when the assets of a company or trust are being distributed between separating spouses. Those considerations can result in separated couples using certain concessions available to them to minimize tax implications. Negotiations between separated parties should cooperatively implement tax savings to one or both parties, noting that the reduction or avoidance of liabilities increases the pool of assets to be divided, leaving more money in the back pocket of our clients.
An example of this might be utilising small business concessions to reduce or disregard a capital gain arising from the sale of a CGT asset as a preference to rolling over that property into the hands of a spouse, who might not have the options to access those concessions upon the ultimate disposal of the asset.
The key to achieving a “tax friendly” property settlement is ensuring that your legal advisor and accountant are working together with a common goal of separating your assets in the most tax effective manner. Early intervention from someone familiar with the circumstances of the parties would ensure that opportunities to reduce tax can be identified and fully considered for the benefit of all.
At Macrossan & Amiet, our Family Lawyers love your Accountant and wouldn’t dream of progressing your property settlement without consulting with them about the best way forward. If you are separating contact one of our Family Lawyers today for an initial appointment.
