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Snapshot

  • When an interest held in a private company/unit trust increases and the private company/unit trust owns land, consider whether the land holder duty is payable.
  • Where land holder duty is payable, also consider whether the private company/unit trust has any linked entities that own land.

In 2018, you acted for your sister, Ana, in relation to the breakdown of her marriage to Chris.

After Chris discovered Ana had cheated on him, a long, expensive and messy divorce followed. It was a terrible experience. In hindsight, you should not have acted for Ana. But, she was so persuasive and you were looking for work at the time, so you agreed to take it on.

When you acted for Ana there was a tax issue for Chris (under division 7A of the Income Tax Assessment Act 1936 (Cth)) when Blue Steel Pty Ltd (‘Blue Steel’) – a company where, at the time, all the shares were held by Ana – transferred the lavish apartment it owned in Coogee to Chris as part of the property settlement. At the time, the apartment was worth around $6 million. Whilst Blue Steel was made a party to the proceedings (which you thought solved the division 7A issue) there was a ruling (TR 2014/5) you discovered too late. The ruling reversed the ATO position for transfers from a private company to an associate of a shareholder pursuant to Family Court orders. Accordingly, transfer of the property was taken to be a dividend of an amount equal to the market value of it.

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