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Unsuspecting spouses get the raw end of the deal with financial implications disadvantaging them and their kids.

Short and brief but really wanted to get this message out for unsuspecting spouses either thinking about or in the throws of separating.

If you’re a director of a company and/or a beneficiary of  a Trust with your partner or spouse with whom you are separating you need to make sure you either receive the distribution from the trust or ensure you are not disadvantaged by a paper distribution which will artificially inflate your taxable income.

Lawyers are not financial advisers!

Financial advisers eg accountants are themselves unaware of implications regarding Family Assistance and the Child Support unless they have experienced this scenario themselves or their clients have and they have understood what has happened.

After working in the legal field for many many years and then having experienced life from the other side of the counter I can assure you of the following:

1.  Lawyers are not financial planners or advisers

2.  Lawyers are engaged to act in the best interest of their client. In fact their admittance to the bar is based on the pledge that they will act in the best interests of their client which creates an avenue for professional negligence action against them if they do not behave accordingly.

3.  The majority of lawyers are not up on the financial implications regarding Social Security Laws re decisions or settlements made for the purpose of Property Settlements

4.  The majority of lawyers or perhaps (Family Lawyers) have tunnel vision focused on attaining or agreeing to a certain number of nights of care for children based around Child Support Assessment calculations and taxable income

 

Okay, here’s a scenario I’d like to share:

You’re a director of a company.

Once things turned bad between you and your partner your involvement with the company reduced or perhaps may never have had much involvement in the running of the company affairs.

Tax Laws and invovlement of tax agents i.e. accountants means company and personal Tax Returns are filed say 12 months or longer after the subject end of year. That is say at a minimum of 12 months after you separated

The company makes a profit in the year you separated and via the trust let’s say 50% of the profit is distributed against your income.

BOOM BOOM!

More often than not this will occur AFTER your property settlement has been signed off.

 

If you didn’t receive the Trust Distribution you’ve been duped!

Centrelink function according to Social Security Law NOT Tax Law.

Subscribe to read another story shortly on effects of Trust Debt.

 

Effectively this is what has happened and will happen:

1.  Your spouse’s income will be decreased

2.  Your income will be inflated

3.  Child Support Assessment is calculated on Taxable Income as reported by the Australian Taxation Office – regardless of whether you received the distribution or not

4.  Family Assistance Payments are calculated on Taxable Income as per Notice of Assessment issued by the Australian Taxation Office

5.  If one of the parents retains or is involved in a business/company then assessments are calculated on outdated figures up to in some cases two years old but which has been slightly increased with CPI (policy of CSA when company accountant involved)

6.  The Child Support Agency only backdates 18 months if you are lucky

7.  The Child Support Agency requires an income estimate. The current policy is that they will only backdate to the date you provided an estimate

 

In my opinion the spouse who has reduced their income and increased yours is evading tax and their child care responsibilities.

 

If you’re a single parent or will become one – BECOME MORE AWARE … or you may be taken advantage of.

Are you, have you been taken advantage of?

Take a stand.

You will be disadvantaged and so too will your child or children. Your partner is stealing from your kids! They may be attempting to hurt you or minimise their tax but effectively they are reducing their parental responsibility at yours and your kid’s expense.

 

To Sharing Experiences for the Benefit of Others

Yours,

Dianne

 

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