The tax implications of relationship breakdown and divorce

Divorce and broken relationships are a fact of life - this IQ module helps you pre-empt and manage the tax impact for clients.

We explore the areas that may impact on your clients in a marriage or relationship breakdown and identify where they may need assistance. For many, the financial and taxation impacts of divorce are not considered until well after the event. Providing proactive advice to your clients in the early stages may help to avoid longer term problems and inefficient taxation outcomes. We look at the tax issues that often arise.

See the IQ module outline.

The Marriage & Relationship Breakdown Module is part of the Principal & Manager I Program of 10 modules specifically designed to manage the training needs of your Intermediate team members across a year.

More on the Principal & Manager Program

Introduction & Outline (1:29)

The role of the accountant (2:23)

Who is involved and when to be involved

CGT issues (2:15)

Overview of the interaction between marriage breakdown and the Capital Gains Tax system

Rollover relief (6:53)

When is it available
Conditions for relief
TD 1999/60
Tax impact on the parties of rollover relief

Quiz | CGT impact on transfer of property (1:07)

Quiz Max & Molly
Quiz answer

Transfers involving entities (9:48)

Transfers from a company/trust
Transfers to a company/trust
Working through the parties to the agreement
Tax impact on transferee
Tax impact on transferor
Managing the cost base
Pre-CGT assets
Managing loans
Special cost base adjustments
Example – transfer of assets from an entity

Impact of recent cases (2:47)

The implications of the Sandini case

Main residence exemption (6:48)

Work through of how the main residence exemption applies in a marriage breakdown
Deemed acquisition dates
Deemed usage
Example | Impact of the main residence exemption on a separated then divorced couple

Status of pre CGT assets (2:41)

Small business CGT concessions (3:48)

Can clients utilise the small business CGT concessions?
The special rules for the active asset test

Depreciating assets (1:32)

Managing assessable gains and losses
When marriage breakdown relief applies

Division 7A (7:33)

Why dividends and deemed dividends are a high risk area
TR 2014/5 and section 109J
Trusts and unpaid present entitlements
Dealing with associates
The different treatment of ordinary and deemed dividends
Managing distributable surplus
Managing franking credits

Quiz | Transfer of company assets (2:25)

Quiz Mr & Mrs Smith

Quiz Answer

GST (1:57)

GSTR 2003/6 and transfers for no consideration
Implications of GST Advice TPP 061

Quiz | GST implications of property settlement (1:49)

Quiz Mr & Mrs White
Quiz answer

Trusts (4:23)

What to look for in the trust deed
Implications of the roles of a trust
Resettlement issues and TD 2012/21
CGT issues and TD 2001/26

Family trust distribution tax (4:21)

The problem of distributions outside of the family group
Who pays the tax
Who is in the family group in a marriage breakdown and Schedule 2F ITAA 1936
The income injection test

Quiz | Tax implications of a discretionary trust (2:12)

Quiz Kim & Kev
Quiz Answer

Quiz | Tax implications of resettlement (1:36)

Quiz Jen & Jack
Quiz Answer

Reference notes are provided with this module.

IQ Presenter

Michael Carruthers

Tax Director, Knowledge Shop

Michael oversees the development of the tax team for Knowledge Shop and Hayes Knight in Sydney and is head of the Hayes Knight group’s national tax committee.

Michael has a knack for seeing through the complexity and helping practitioners work through highly technical issues with certainty and accuracy.

He is a member of the advisory panel for the Board of Taxation and was an expert panel member for the Board of Taxation’s review of tax impediments facing small business.

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Michael was the Thought Leader of the Year at the 2016 Accounting Awards

Marriage & Relationship Breakdown