RSM Australia

Negotiating Tax-Effective Settlements

Effective Tax Settlement

Prior to finalising the settlement of property, it is important that all superannuation and tax complexities associated with structuring property settlements are addressed.

This ensures that parties don’t find themselves with surprise tax outcomes or a smaller than expected share of the asset pool.

It is important to identify the most tax effective manner to facilitate and protect the agreed settlement.

 

Some issues to consider:

  • superannuation and tax effective settlements from structuring property settlements are adequately addressed before property settlements are finalisedEligibility for either party to access the Capital Gains Tax marriage breakdown roll-over relief.
  • Whether the transfer of a property out of a company or associated trust will fall foul of Division 7A, or whether it be treated as a dividend or trust distribution for tax purposes.
  • Whether either party has any prior year carried forward tax losses.
  • Which party will keep the main residence and whether the full main residence exemptions apply.
  • The application of GST on any transfers of property.
  • Whether the transfers of dutiable property are eligible for access to the relationship breakdown concessions.
  • If any are being written off and whether this will trigger the commercial debt forgiveness rule.
  • If there are sufficient franking credits available to frank any proposed dividends.
  • The treatment of Division 7A loans in the settlement.
  • In the event of the sale of assets to facilitate the settlement whether all concessions and structures been considered to effectively manage tax and the accuracy of all calculations of tax payable.
  • Identify and consider all post settlement and on-going tax consequences of the property settlement.
  • Whether parties are eligible to roll-over their superannuation entitlements.
  • If there is any tax payable on the transfer of superannuation entitlements.
  • Whether the appropriate taxation indemnities have been included in the proposed orders.

 

Our specialist Family Law tax team can assist with all tax-related matters relating to property settlements and general compliance.

The advice of a trusted tax advisor when structuring property settlements can save your client thousands.

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