May 05, 2016
Let’s be honest here – nobody likes talking about tax. However, we have some good news for you. The law stipulates that no stamp duty is required on the transfer of assets in family law property settlements where there is either a Family Law Order (a Court Ordered division of property) or Family Law Agreement (agreed upon division of assets).
But why have this provision?
Transferring assets is an inevitable part of any family law property settlement. Consent orders often require the sale of the matrimonial home, the transfer of the certificate of title, the registration of a new interest over the land and the transfer of other chattels, just to name a few. This provision recognises that property settlements are already time-consuming and complex enough without complicating the process more by forcing parties to also negotiate responsibility for tax obligations and stamp duty. As such, couples may avoid paying tax on these assets in a property settlement.
The specific wording of this provision also encourages parties to seek Consent Orders or make a formal Family Law Agreement. While the former is still more binding than the latter, this provision nonetheless prompts couples to finalise their arrangement and minimises the chance of the matter coming to court time and time again.
A warning…
Unfortunately, many people simply view this provision as a tax break. This is not so. In practice, this provision requires couples to be undergoing a property settlement. To undergo a property settlement, couples need to demonstrate that they have separated permanently. As such, it is not a simple case of redistributing a few assets just to get a tax break, its only applicable if you are separating and going through a family law property settlement.
If you have any questions or concerns regarding tax and family law property settlements, please contact James Frank for further advice at jfrank@franklegal.com.au or 02 9688 6023 or click the button below.
This article is provided to the reader for general information. It is not legal advice. It was written by Emily Graham & Andrea Spencer and edited by James Frank.
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