Tax & Superannuation: Company Tax - Guides
Company Tax
7. Changes in Law
Last updated: 10 Jul 2015
- Tax law is subject to change from a number of different sources including:
- legislation;
- taxation rulings and determinations of the ATO;
- ATO publications;
- Federal and High Court decisions; and
- Administrative Appeals Tribunal decisions.
- It is essential to engage a lawyer with particular expertise in tax law to provide accurate and relevant advice on the current status of the law. Changes in law can have varying outcomes regarding tax and other legal outcomes for you and for your company.
- For example a significant change in the law took place in 2014 when the ATO issued a new Taxation Ruling regarding how payments between spouses who are both company shareholders whose marriage has broken down are taxed.
- Since most family companies have both spouses as shareholders a breakdown in their relationship and a subsequent family court order for payments between them can have taxation consequences.
- With the issue of a new Taxation Ruling in July 2014 the ATO changed its view on payments and transfers of property made to shareholders and their associates in a private company involved in family law proceedings.
- The outcome of the Ruling is that such payments and transfers will be considered as dividends paid by the company and taxed accordingly. However the company will be able to frank such dividends.
- The position before the Ruling was that provided the company was obliged under Section 79 of the Family Law Act 1975 to make a payment such payments would be considered as:
- discharging an obligation by the company; and
- not distribution of profits; and
- therefore not taxable as dividends.
- Before making important decisions that may impact on your tax situation it is advisable to obtain legal advice specific to your situation. LegalEagle’s™ free directory profiles all lawyers in Australia. You can use it to Find a Lawyer near you.
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