Well it seems the Gov. is going after Trusts (just days after a court case, where a trust lost).
From: http://www.ag.gov.au/www/MinisterRuddockHome.nsf/Alldocs/RWP1164DF2FA5D38B59CA256E94000F2CC9?OpenDocument
—
TOUGHER LAWS TO STOP BANKRUPTS LIVING THE HIGH LIFEThe Attorney-General Philip Ruddock today released an exposure draft of legislation
targeting high income earners who use bankruptcy to avoid paying debts they can afford to
pay.“Under these changes, the trustee in bankruptcy will be able to recover assets held in the
name of the bankrupt’s spouse, or that of another party, where the bankrupt has paid for and
uses the asset,” Mr Ruddock said.“These changes will mean that high income earners who become bankrupt won’t be able to
rely on financial arrangements designed to shield assets from creditors.”Other changes included clarifying the rights of the parties when family law and bankruptcy
issues need to be resolved and giving the bankruptcy trustee stronger powers to collect
income contributions during bankruptcy.“The bankruptcy trustee is also given enhanced powers to apply to set aside transfers of
property under family law financial agreements where those transfers put that property
beyond the reach of creditors,” Mr Ruddock said.The Attorney-General said these changes were based on the recommendations of the Joint
Taskforce Report on the Use of Bankruptcy and Family Law to Avoid Payment of Tax- an
inter-agency report proposing changes to bankruptcy, family and tax laws to crack down on
high-income tax avoiders.The Government was keen to ensure there was an opportunity for Parliamentary and public
scrutiny of the reform proposals, and had referred the draft legislation to the House of
Representatives Standing Committee on Legal and Constitutional Affairs, he said.
—Links of revelant Legislation:
http://www.itsa.gov.au/dir228/itsaweb.nsf/docindex/reform-%3Eamendments-%3Eamendments?opendocumentOr (the actual legislation):
http://www.ag.gov.au/www/agdHome.nsf/AllDocs/RWPE1E1F3D177AB85BFCA256E9400074DD2?OpenDocument
http://www.ag.gov.au/www/agdHome.nsf/AllDocs/RWP5C483A1C0B156DD8CA256E940009DE18?OpenDocument—
So have we just lost our asset protection if we personally go bankrupt???? (If so I can’t even see the point of trusts….). Will a corporate trustee stop any of this???
Rgds.
Lucifer_auHi Lucifer,
The ATO arent “going after trusts”..
They are going after bankrupts. Do you think you should personally be able to claim bankruptcy, potentially owing other people millions of dollars, yet still be able to protect your own multi million dollar portfolio?
I thought the idea worked both ways – in order to secure your financial future you should be subject to the same laws you may one day seek refuge under…
Secondly, this is merely a proposal – its nowhere even close to being a law…
http://www.somersoft.com/forums/showthread.php?t=15976
My understanding is that this proposal is designed to seek fair and just compensation from those that attempt to hide their assets when claiming bankruptcy.. it is not an attempt to circumvent the legitimate use of trusts as a means of asset protection, wealth creation and distribution of profits to beneficiaries for property investors.
“Under these changes, the trustee in bankruptcy will be able to recover assets held in the
name of the bankrupt’s spouse, or that of another party, where the bankrupt has paid for and
uses the asset,” Mr Ruddock said.“These changes will mean that high income earners who become bankrupt won’t be able to
rely on financial arrangements designed to shield assets from creditors.”Dont go bankrupt, and youll be fine [biggrin]
Jay.
That’s easy to say – don’t go bankrupt. But lets say I am sued and lose and a massive amount is awarded against me, what happens if I don’t have a choice but to go bankrupt. Then the assets in the trust could (if it becomes law) be open to potential creditors… Which means NO asset protection.
Also I never, ever said that “The ato arent “going after trusts”..”
” it is not an attempt to circumvent the legitimate use of trusts as a means of asset protection, wealth creation and distribution of profits to beneficiaries for property investors.”
So the Gov. says if you go bankrupt the trust asset will go into the firing line. Now I know not ever lawyer will do this, but if one targets you and tries to bankrupt you (through high legal bills from their side and them winning the case, which could ammount to massive amounts of money… Do you have a spair $100K lying around???) your assets are open. So it can be used to circumvent the asset protection of trust.
As for not being law yet… Maybe not yet, but with the Gov. controlling the lower house and the public remembering HIH & Rodney Adler – you don’t think it would make it through the senate?…
“Dont go bankrupt, and youll be fine”
Don’t get sued and you’ll be fined… In fact don’t even buy any assets and you’ll be fine…..
Rgds.
Lucifer_auOriginally posted by Lucifer_au:
“Under these changes, the trustee in bankruptcy will be able to recover assets held in the
name of the bankrupt’s spouse, or that of another party, where the bankrupt has paid for and
uses the asset,” Mr Ruddock said.Easy, don’t use the asset. Also, if the trust purchases the asset, the bankrupt didn’t, and therefore the asset is untouchable.
I would suggest the intention is to stop people like Mr Bond, Mr Skase, Mr Adler et al transferring their assets quickly to spouse/trust/kids etc. to avoid them being ‘up for grabs’.
Cheers
MelHi All,
Been doing a lot of reading but not much contributing to the forum. Iguess it’s about time as this trust issue was of interest to me.
This is a quick post to note that it seems trusts are off the hook:http://theage.com.au/articles/2004/07/22/1090464796550.html?oneclick=true
Still finding my way around – hope this is the right place to put it!
Regards
Greg (glams)
Some good news on the Bankruptcy Laws front. The latest reforms have been withdrawn.
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