Family Law Library

A Curly Case for the Commissioner of Taxation

A CURLY CASE FOR THE COMMISSIONER OF TAXATION

CAO & TRONG AND ANOR [2018] FAMILY COURT OF AUSTRALIA

There is no escaping the Family Court and the Commissioner …

The wife filed an application for a final property settlement, including an order that:

1. The husband indemnify her against ‘against any liability present or contingent including tax … in respect of E Pty Ltd’; and
2. The husband be responsible ‘for all income tax assessed on income received or deemed to have been received by the husband’.

In the period 2005 -2012 the husband incurred a tax liability of $5,519,200 (unpaid).

The Commissioner of Taxation sought leave to intervene in the property settlement proceedings and an order that the court first make provision for the payment of taxation liabilities to the Commissioner prior to any property distribution to the parties.

Before the matter could be determined by the court, the parties effectively withdrew their respective applications for final property settlement orders.

The wife advised the Commissioner that there was therefore now no basis for it to intervene.

The Commissioner was successful in its application for an order that the court does have the jurisdiction and power to determine an claim against a creditor pursuant to section 79 property settlement proceedings – even if the parties have withdrawn their applications.

The case was run by the Commissioner of Taxation as a ‘test case’ and confirmed that even when the parties themselves no longer seek the assistance of the court to achieve a final property settlement, if the Commissioner has already intervened in those proceedings, the court has jurisdiction to make an final order in its favor – and the liabilities owed to it enforced as an order of the Family Court.

In other words – there’s no avoiding the Commissioner – no matter what agreement the parties themselves might ‘agree on’, there’s no way around their obligations to it.

I hope that the year is treating you well – even though it is flying by.

We continue to offer a free 15 minute telephone consultation to your clients in need of family law advice – they can call me on 9804 7991 or email enquiries@mflaw.com.au to book a time.

And remember, we’re always happy to help you out with your own ‘curly cases’.

Stay in touch,

Vanessa and the Team at Mathews Family Law