So you’ve been in a car accident and have been sued by the other party for property damage (or hire car) and don’t know what to do?
First, don’t panic. The courts deal with thousands of car ancient claims every year, you’re not the first to be involved in this type of matter and won’t be the last.
Second, don’t wait and don’t ignore any Court documents. Ignoring any Court documents, especially a Statement of Claim can lead to default judgment being entered against you. Not only can that affect the ability to defend any claim, but it could have other detrimental effects, including on your credit record.
If you have third party property damage insurance or comprehensive car insurance, either make a claim or notify your insurer that you have been sued. Do this even if you have already made a claim with the insurer for your car. If you haven’t made a claim, lodge a claim – you may need to pay an excess but in the long run, it may work out cheaper for you and with less stress.
Your insurer will likely look after the claim for you. Most insurers have legal firms on retainer or on legal panels who will deal with the matter on your behalf, and it forms part of the insurance coverage that you have. You will, however, likely to be required to cooperate and assist the lawyers.
Note that Compulsory Third Party (CTP) insurance , this will not cover property damage (a useful summary of CTP insurance (at least in NSW) and what it is for can be found here: What is a Green Slip? – SIRA (nsw.gov.au).
Even if you have insurance and the insurer will deal with the matter, the individuals involved in the car accident are the actual parties to the proceeding e.g. the plaintiff(s) or defendant(s). For example, it is the driver of the “at fault” vehicle that was negligent, not their insurer.
It is not uncommon for both parties to have insurance and in reality, the court proceeding is a dispute between the insurers about who is liable and for what amount. The insurers take over conduct of the legal dispute due to the legal principle of “subrogation”.
If you don’t have insurance then you will either need to get a lawyer or try to resolve the matter yourself. You do not have to retain a lawyer to assist you and you can represent yourself; however, we would always recommend that you obtain legal advice and/or representation in any Court proceedings. A lawyer will not only be familiar with the relevant case law dealing with your dispute but will also be familiar with the practice and procedure of the Court and will know what is required to defend your case.
The Fair Work Act 2009 (Cth) (‘FWA’) entitles employees to a paid day away from work on public holidays. However, pursuant to section 114(2) of the FWA an employer can ‘request’ an employee to work a public holiday where reasonable. Whether ‘request’ should be interpretated as ‘requirement’ was recently deliberated by the courts in Construction, Forestry, Maritime, Mining and Energy Union v OS MCAP Pty Ltd [2023]. This case confirmed that employers cannot automatically schedule employees to work on public holidays as the court confirmed a ‘request’ should be made in the form of a question leaving the choice to work open to the employee. The Court confirmed that the request is an intention to prompt a discussion as opposed to a unilateral demand.
However, the Court’s interpretation still reinforced that an employer involved in critical services, or where it is desirable for the business to remain open, can require employees to work on public holidays as long as:
Do employers require the consent of employees to work on public holidays?
Employers require the consent of their employees to work on public holidays as section 114(3) of the FWA provides than an employee can refuse to work on a public holiday, if the request to work is unreasonable. Further, as confirmed in Construction, Forestry, Maritime, Mining and Energy Union v OS MCAP Pty Ltd [2023] an employer’s request of an employee to work a public holiday should take the form of a question which allows the employee to make a decision on.
What is deemed as a reasonable request by an employer to work on a public holiday and when is it reasonable for an employee to say no?
Section 114(4) of the FWA outlines what is considered when determining both whether an employer’s request and an employee’s refusal are reasonable. This will depend on factors including:
What Act/s do employers need to be aware of when it comes to requiring employees to work on public holidays?
Employers need to be aware of the provisions set out in section 114 of the FWA as well as any additional requirements set out in a relevant modern award or enterprise agreement. Employers should also have regard to the Court’s findings in Construction, Forestry, Maritime, Mining and Energy Union v OS MCAP Pty Ltd [2023] which reiterate the position at law when it comes to requesting employees to work on public holidays.
The recent amendments to the Fair Work Act 2009 (FWA) introduce a new section 65A dedicated to the process of responding to requests for flexible working arrangements.
The grounds are assessed on an objective basis. However, the FWA now provides that employers can refuse requests if:
What are penalties if an employee feels as though an employer is being unreasonable?
If an employee considers that their employer’s refusal is unreasonable, the employee can escalate the dispute to the Fair Work Commission. The Commission will first attempt to deal with the matter by conciliation or mediation and if no resolution can be achieved the Commission will proceed to arbitration and can make binding a decision on the parties including ordering that the employer responds to the request and determining whether the employer must accommodate the request.
How long can the process take?
Pursuant to section 65 of the FWA an employer has 21 days to respond to an employee’s request for flexible working arrangements. In circumstances where a matter is referred to the Fair Work Commission the time that can be taken to deal with the matter can depends on various factors including the progression of the dispute and the availability of dispute resolution mechanisms, however if progressed to arbitration this could take months.
What are the grounds for mediation? (If any)
Dispute resolution at the FWC level is first conducted through the process of conciliation or mediation. This is available when:
Have there been any cases before the Fair Work Commission on this matter and if so, what was the outcome?
Yes, there has been some notable decisions. Recently, in the case of Natasha Fyfe v Ambulance Victoria [2023] FWC 49 the Commission explored Ambulance Victoria’s grounds for refusing Ms Fyfe’s flexible working request. As a working mother, Ms Fyfe requested a change to her rostered hours to allow her to care for her three children whilst her partner was at work. The Commission found that Ambulance Victoria failed to discuss or consult with Ms Fyfe regarding its decision to refuse her request or make any attempt to achieve a workable solution and on that basis their refusal was unreasonable.
In the recent decision of Forza Marketing Pty Ltd v Sie [2023] NSWSC 658 the Court considered what happened when a business arrangement fell apart, in part due to their being no written agreement in place. This case served as another reminder of the value of getting thorough legal advice before committing yourself to a business.
Two families operated a motel in Cooma together until their relationship deteriorated.
Family A owned the land the motel was operated and leased it to one of their companies. They had bought the land in a state of disrepair and refurbished it.
Family B had assisted Family A over the years, and came to assist with the motel. Importantly, they did not enter into a written agreement about the arrangement. The Court found the arrangement was defined by “uncertainty, if not confusion”.
The parties broadly had in mind that Family B would buy the motel but, over time, the situation became more complex.
Family B operated a separate business using an EFTPOS machine. That business included providing rental accommodation and other services, also in Cooma. Family B accepted payments via the EFTPOS machine for that business from time to time. From time to time Family B also used the EFTPOS machine to accept payments in relation to the motel.
After a while Family A stopped payments being made to Family B for their work, apparently (though this was not documented) on the basis that these “non-payments” would be credited against any eventual purchase price.
Family A accused Family B of misappropriating funds and pulled out of the proposed sale. A little later they evicted Family B from the land the motel was on.
The dispute crystallised into being about which family owed the other family money, and why.
Without any documents to help, the Court had to consider what the parties legal relationship was.
The Court found the relationship was not a partnership, not a joint venture, and not an equitable relationship. It was a “loose, consensual arrangement whose terms were implied”.
Family B argued they should get the deposit they paid for the purchase, and the “non-paid” invoices; a total of around $105K.
Family A claimed, among other things, the various payments made through the EFTPOS machine. With a lack of evidence about whether the payments were for the motel or for Family B’s other businesses, the Court found it would be fair if Family B had to repay around half of the EFTPOS payments.
Orders were made that the Family B pay Family A around $132K, and the Family B pay Family A around $105K.
The Court invited submissions on costs but suggested an appropriate order may be that each party bear their own.
Without wishing to be flippant or disrespectful, each party might also bear their own regrets about failing to document their arrangement.
If you are considering entering into a business arrangement but don’t know where to turn, protect yourself from outcomes like this by reaching out to Stipe Vuleta.
In our recent article on WZWK and Commissioner of Taxation,[1] we discussed the dangers facing self-managed superannuation fund (SMSF) trustees who act improperly, including potential tax penalties and disqualification.
This raises the question: under what circumstances can a SMSF trustee make a payment of benefits? We help you navigate the highly regulated and daunting legal landscape of superannuation law below.
What is a SMSF and who acts as a trustee?
A SMSF is a private superannuation fund. It is a form of trust which allows you to privately manage your funds or assets for retirement.
Like any trust, a SMSF is run by its trustees, for the purpose of providing future retirement benefits for its members. The trustees are responsible for managing the investment and distribution decisions of the fund, and are under a fiduciary obligation to act in the best interests of the members.
A common set up is where partners or spouses are the two trustees and members of the SMSF, or there might be a corporate trustee (i.e. a company registered for this purpose) where individuals act as directors and shareholders of the company. A SMSF can have six members at any one time, and these are often family members.
While SMSF’s are an attractive superannuation options for the independence and flexibility they provide, they also come with financial and legal risks. The trustees must ensure that the activity of the fund complies with superannuation and taxation law.
When can a trustee pay SMSF benefits?
Benefits can only be paid to a member of a SMSF where they satisfy one of the conditions of release.[2] These conditions are legislated under superannuation law. However, it is possible that the rules governing your SMSF may impose stricter requirements before benefits will be payable.
Accordingly, before releasing any funds, a trustee must be satisfied that the member has met one of the conditions and that the rules of the relevant SMSF, which are typically set out in the trust deed, allow the payment. Some examples of conditions of release for a member to be eligible for superannuation benefits in this context include –
a) Attaining the age of 65 years
At this age, even if a member has not retired, they will become able to access their SMSF benefits.
b) Ceasing employment on/after attaining the age of 60 years
At this age, members who cease employment may cash accumulated benefits.
c) Attaining the preservation age and transition to retirement
If the SMSF trust deed permits, a transition to retirement income stream may be paid to members who have reached their preservation age (this age varies but is often between 55-60) but want to continue to work. This will take the form of an account-based pension. To find out more visit the ATO website here.
Payment from a SMSF can also be made on the death of a member. That is, where a member has died, the SMSF death benefit is paid to a death benefit beneficiary, which is often a spouse or partner, children or the member’s estate.
Record Keeping
Accessing super benefits early is fraught with danger. SMSF trustees must ensure that:
Failure to do this may bear serious consequences, such as if the SMSF is audited. If the ATO is not satisfied that the trustee/s have acted as they should, this may lead to a finding that superannuation has been released illegally and tax penalties may apply. It may also lead to the trustee/s being disqualified from continuing in their role.
We’re here to help
At Chamberlains Law Firm, the experts in our Private Wealth Law team can assist you. We specialise in superannuation law and can provide personalised advice on SMSF issues and compliance.
We can assist with the establishment of a SMSF in consultation with your accountant or financial advisor, together with ensuring documentation remains up-to-date and compliant in light of changes in the law. We can provide tailored advice to trustees regarding their duties and obligations, minimising death benefit taxes, implementing succession strategies for estate planning, reviewing trust deeds and more.
If you require our assistance, please reach out to our team.
[1] (Taxation) [2023] AATA 872 (26 April 2023).
[2] Conditions of release | Australian Taxation Office (ato.gov.au)
Family provision claims: dependency and the extended family – Aunts and Uncles, Nieces and Nephew
The most common form of estate or will challenge is what is known as a family provision claim. Any family provision claim requires the claimant to be eligible – which can be a matter of fact. For example, people who were, at some point, dependant on the deceased can make a claim against the estate in certain circumstances.
The New South Wales Supreme Court has recently handed down a decision in Noble v Durrant [2023] NSWSC 513 which considers one form of this kind of estate dispute, where two adult nieces brought a claim for provision from their deceased aunt’s estate. The relationship of aunt-niece is not one where a party can bring a claim ‘as a right’ and instead requires the court to determine eligibility.
What is a family provision claim?
A family provision claim is an application to the Court that proper and adequate provision has not been made for a person that the deceased, and the deceased had an obligation to make that provision. Adequate and proper provision includes provision for a persons maintenance, education, or advancement in life. Such a claim is usually brought when the eligible person is given nothing under a will, or given a smaller provision than they expected.
Could I make a claim over my Aunty or Uncles estate?
For an individual considering a claim on their aunt of uncles estates, there are two main questions to consider: eligibility and adequate provision.
Only “eligible persons” may apply to the Court for these types of order. The criteria for eligibility differs between the States and Territories. Typically, a niece or nephew will need to be a dependent under the relevant law, arguing they were wholly or partly dependent on the deceased and a member of their household at the relevant time, usually as children. In NSW, this is found under section 57(1)(e) of the Succession Act 2006 (NSW).
If the claimant is an eligible person, they will then have to prove that adequate and proper provision has not been made in the circumstances, and that there are factors warranting an order for provision. The Court may consider a wide variety of factors to weigh the moral obligation of the deceased to provide for the applicant, including any estrangement between the deceased and the applicant, the applicant’s financial circumstances and future needs, as well as and any competing claims by others on the estate.
Case Study: Noble v Durrant [2023] NSWSC 513
The Supreme Court of NSW recently considered the eligibility of nieces, Charlotte and Carolyn, in their claim over their auntie’s estate in Noble v Durrant. In this case, the two adult nieces lived in the same household as the deceased as children after their mother passed away. The deceased was one of the members of the extended family which cared for Charlotte and Carolyn while they lived with the deceased and their step-grandfather on a family farm.
In this case, the court considered whether there were factors warranting the making of the application and if inadequate provision was made. Neither of the claimant nieces received anything under the will of the deceased.
The Court concluded that both claimants were eligible, in the circumstances. However, the Court dismissed the claim, finding that there was insufficient factors warranting making an order, especially when considering the lack of financial need of Charlotte and Carolyn, and upon examining the relationship between the deceased and the two claimants.
However, it is significant that the Court considered the claimants to be eligible people, leaving other claims made by nieces and nephews open to the Courts consideration.
How can we help?
If you believe you might be eligible, early advice on the prospects of your claim are vital – strict time limits can apply, rendering your claim unable to be brought. If you are administering an estate and are concerned there might be a claim, advice on the nature and level of risk of that claim is highly desirable. At Chamberlains, our team of estates lawyers are familiar with the relevant law and experienced in conducting these cases and we invite you to engage our expertise to give you the best opportunity for a successful outcome.
The most common form of estate or will challenge is what is known as a family provision claim. Any family provision claim requires the claimant to be eligible – which, if you are not in certain categories at law, becomes a matter of fact to be determined by the Court. For example, a person living in a de-facto relationship or ‘in a close personal relationship’ with the deceased person is a matter of fact to be determined on the evidence in Court.
The New South Wales Supreme Court has recently handed down a decision in Sheen v Hesan [2023] NSWSC 468 which considers this kind of estate dispute, where de-facto partner brough a claim against the deceased’s estate. In this case, the nature of the relationship, and therefore the eligibility to make a claim over the estate, was disputed.
What is a family provision claim?
A family provision claim is an application to the Court that proper and adequate provision has not been made for a person that the deceased, and the deceased had an obligation to make that provision. Adequate and proper provision includes provision for a person’s maintenance, education, or advancement in life. Such a claim is usually brought when the eligible person is given nothing under a will or given a smaller provision than they expected.
Can I make a claim over my de-facto partners estate?
For an individual considering a claim on a de-facto partners estate, there are two main questions to consider: eligibility and adequate provision.
Only “eligible persons” may apply to the Court for these types of order. The criteria for eligibility differs between the States and Territories. Each state includes different requirements for those in a relationship, though not married. For example:
If the claimant is found to be an eligible person, they will then have to prove that adequate and proper provision has not been made in the circumstances, and that there are factors warranting an order for provision. In its determination, the Court may consider a variety of factors, including the applicant’s financial circumstances and future needs, as well as and any competing claims by others on the estate.
Sheen v Hesan [2023] NSWSC 468
In the recent case of Sheen v Hesan [2023] NSWSC 468 the New South Wales Supreme Court considered a claim for provision brought by Doe Hwa Sheen (known as “Winnie”) over the estate of the deceased Mohammad Bashir Zaheer. In this case, the deceased died without leaving a will.
Winnie sought the courts recognition of her relationship as a de facto relationship with the deceased as otherwise she could not make a claim on the estate. Typically, de-facto partners are entitled to provision under intestacy as a spouse if they were in a relationship of more than two years at the date of death. The Court considered the characterisation of their sometimes tumultuous relationship of some 13 years. Ultimately, the Court found that Winnie was an eligible person to bring a claim due to the nature of her relationship with the deceased, namely, being a member of the same household and partly dependent on the deceased, but did not find that there was de-facto relationship ending shortly before his death.
The Court then found that adequate provision had not been made for Winnie under the rules of intestacy, which would divide the estate solely between the deceased’s siblings (because she was not the de facto spouse). Therefore, the Court ordered the provision of 15% of the deceased’s estate to Winnie, the rest to be divided between his eight siblings.
How can we help?
This case underscores the central importance of getting clear and comprehensive advice on the circumstances of your claim. Our specialist lawyers will consider your circumstances in light of the relevant legislation and potential Court outcome in order to give you an understanding of what options you have. Contact our specialist estate contest solicitors to discuss your options.
What happens if a literary executor goes rogue?
How does a literary executor deal with the ‘ordinary executor’ if they don’t get on?
How do you deal with your family member or friends best-selling novel now that they have passed?
Probate law deals with property. Most people accept that will cover real estate, money, shares, investments of various kinds, even superannuation in the right circumstances. What about the fruits of your creative labours in your lifetime – artistic works, a best-selling novel, sculptures, letters between you and your muse? Often, the creator of the works wants to see their work promoted and their legacy maintained after their death – but wants to exert control about how that is done, who can exploit their works for profit and who shares in the profits that flow.
This is the third and final part of a three-part series looking at the concept of “literary executors. Part 1 looked at appointing a literary executor under your will. The Part 2 looked at administering estates including a literary estate. In this final part we will look at what kinds of issues and disputes can arise by examining case studies.
Restriction: James Joyce
The Irish author and poet James Joyce left a significant legacy of literary property following his death in the 1970s. His grandson Stephen took control of the literary estate and has become infamous as an example of a zealously protective representative, exercising his power vocally and liberally. Stephen prevented or severely restricted the use and quotation of Joyce’s work for many years – so much so that in 2004, the Irish Parliament modified the copyright law of the nation to permit certain manuscripts of the novel Ulysses to be exhibited on the centenary of their publication. In 2005, proceedings were brought in the United States for an author to quote Joyce’s comments about his aunt at the Court rejected the purported protection of privacy of the family as a misuse of copyright. The case ultimately settled.
Stephen Joyce’s strident conduct is a cautionary tale about the extent to which literary estates can effectively ‘rule from the grave’ and also an expression of the potential for a literary executor, infused with the power of their position, to create more issues than the author ever contemplated.
Charging: Eric Blair (aka George Orwell)
Eric Arthur Blair (better known by his pen name, George Orwell) was married to Sonia Mary Brownell Orwell and by his will left his entire estate to her – which, of course, included his ‘literary estate.’ Sonia, in turn, made a will that appointed three individuals as executor and trustee of her estate, and also a literary executor – Mark Hamilton, a director of a firm of literary agents AM Heath & Co, whose job would be to exploit Eric’s works and derive income from them. Mr Hamilton was to pay the income to the ‘general’ executors who was to distribute the income to Eric and Sonia’s son Richard for life.
In re Orwell’s Will Trusts, Dixon & ors ats Blair [1982] 1 WLR 1337, the dispute arose over whether Mr Hamilton, via his firm, was permitted to charge for time spent, and to retain commission for his services in respect of the literary estate. This required an examination of the terms of the will and in particular the charging provisions, and in this case resulted in the literary executor being permitted to charge for his time and trouble and to be remunerated for his work.
Permission: The Daleks from Dr Who
Mr Justice Norris starts his judgment in In JHP Limited v BBC Worldwide Limited & the Trustees of the Estate of Terry Nation [2008] EWHC 757 as follows:
“The Daleks first became known to humankind in 1963 when they appeared in the first series of “Dr Who”. They were some of the most engaging and enduring creations of the fertile mind of the late Terry Nation, though the conceit he used was that he simply learned of their existence through his discovery of “The Dalek Chronicles”, which he translated.”
The Daleks and their terrifying “EXTERMINATE” catchphrase were the subject of dispute between a publishing company formed by one of the late Terry Nation’s collaborators on the one hand, and the BBC and Mr Nation’s estate on the other. The complex history of licences, and oral agreements, copying (or not) of certain aspects of the Daleks were analysed by the judge to a finding that the publisher had an exclusive licence to publish, and that the historical agreements did not transfer the copyright. This case again underscores the need to specifically define the scope of a literary estate, and to investigate as far as possible existing agreements made by the creator from the outset.
What to do next?
Literary estates can be a complex affair and we encourage anyone who is appointed as a literary executor – or even just as ‘regular’ executor of an estate that includes creative endeavours – to get in touch with our expert solicitors to discuss the situation further so that it can be dealt with correctly and efficiently from the outset.
Will disputes have been on the rise for some time. Some of the reasons put forward include the growth of wealth being accumulated (and thus potentially passed on by way of inheritance) of older generations, and changes in family dynamics such as the rise of the blended family. These issues and their impact in the estate contestation space have been the topic of a recent article in the Financial Review (see link here titled Succession: Warring families undermining $3.5 trillion of inheritances (afr.com)), who observe that the value of wealth is only expected to increase.
What kinds of estate or Will claims can arise?
Disputes can arise surrounding the validity of a will. This could involve allegations that the deceased did not know what they were signing, did not have capacity to make a Will, or were subject to undue influence or pressure to make a Will. A Will could also be challenged where it does not conform with legal requirements for a valid Will. A challenge to the Will can lead to an estate contest, which can impact how a person’s wealth is distributed.
A family provision claim is another kind of claim on a deceased estate. These are made on the basis that the will maker did not adequately provide for a person to whom they had a moral obligation to provide for. The law differs across the States and Territories, but they are often made by a spouse, partner or children. Claims can also sometimes be made by dependant grandchildren or stepchildren. These types of claims have become more prevalent with the increase in the number of blended families, such as where parents have re-partnered and have children to a previous relationship.
It is important that legal advice is sought, to consider any potential claims and how best to protect your assets, so a comprehensive and tailored planning strategy is put in place.
What planning is important for protecting wealth?
There are a few crucial areas to consider when looking to future-proof your assets for the next generation. One issue is estate planning. For example, preparing a Will which effectively deals with your estate and additional documents, such as a statement which explains reasons for provisions in your Will, is important to ensure your wishes are known and, if no successful dispute arises, that your estate passes the way you wish.
Other important planning strategies can also include succession provisions for businesses, companies, and trusts. It is also important to consider superannuation, including your self-managed super fund, and any updates which may be appropriate, for example a binding death benefit nomination in a recommended form. Failure to implement effective planning mechanisms can have significant implications, including contested estates.
How can we help?
If you would like to discuss your estate planning and succession strategy, or are looking at a potential Will dispute or estate contest, our estate specialists in the Private Wealth Law team at Chamberlains can assist you.
The Federal Court’s recent decision of Deputy Commissioner of Taxation v Widdup (No 2) [2023] FCA 377 (“Widdup”) has confirmed the ATO’s broad powers to pursue unpaid family trust distribution tax, and is a reminder of the dangers for trustees who fail to seek advice in relation to the administration of their family trust.[1]
What is a Family Trust?
A family trust is a discretionary trust that is established by someone during their lifetime to manage family assets or investments and to support family members as beneficiaries.
Family trusts offer the benefits of asset protection and tax minimisation, and are usually established for these purposes. They also provide the ability to protect vulnerable or other family members, such as spendthrifts, by ensuring assets are controlled in the family trust structure for their benefit.
One of the most important roles in family trust, or any trust, is that of the trustee. The trustee is typically given broad powers to manage the trust and its assets, including to distribute income earned on trust assets at their discretion to beneficiaries of the trust. Trustees are also bound by various duties, including the responsibility to fulfil the trust’s tax obligations.
Family Trusts and Tax Rules
The ATO has strict procedures in place in relation to family trusts. A trust will only be considered a family trust for tax purposes if the trustee has made a valid family trust election (“FTE”). A valid FTE is made when certain tests are satisfied and documents completed in the required manner.
When a valid FTE is in place, the family trust has the potential to access certain tax concessions (i.e. tax benefits). However, if distributions are made outside the family group of the trust, family trust distribution tax (“FTDT”) is applied at the top marginal tax rate plus Medicare Levy (47% at the time of writing).[2] Typically, only members of the family group can be beneficiaries to the trust.
Companies, partnerships or other trusts can also be made members of the family group, and accordingly beneficiaries to the family trust, by the making of what is known as an interposed entity election (“IEE”). One reason for an IEE to be made is so the trustee can, for example, make distributions on or to the entity without the liability for FTDT being incurred by the trustee.
The Widdup Case
Widdup highlights the take-no-prisoner’s approach of the ATO, which has been backed up by the Court, in cracking-down on family trust distributions to non-beneficiaries where a tax liability has not been declared.
The Widdups (Mr and Mrs Widdup) and associated companies (together, “the respondents”) applied to the Federal Court to seek that the significant (multi-million) tax liability, which they had paid to the Court after multiple issues arose and freezing orders were made against them, be repaid to them.
By way of background, Mr and Mrs Widdup established a family trust (originally J&C Widdup Family Trust, later Fidelity Holdings Trust, “the family trust”). The trustee of the trust was JCW Capital Pty Ltd (“the trustee”), a company controlled by Mr and Mrs Widdup as directors. Further comments about the background include the following –
In the decision handed down in April 2023, the Widdups were ultimately unsuccessful. It was not an appeal case, however, the Court here dismissed the Widdups’ application (this meant they refused the Widdups request for repayment of funds paid into Court for the tax liability plus interest). It was also an additionally costly process, as the Court ordered that costs be paid by the respondents.
So, not only did the Widdups fail to claw back the money they had paid to the Court on account of tax (as a result of the freezing orders), they also had to pay Court costs for the ATO.
How Chamberlains Can Help
The Widdup decision underscores the dangers for trustees who attempt to circumvent the ATO’s strict rules regarding family trust elections and family trust distribution tax, and is a timely reminder of the benefits of seeking specialist advice to ensure you are meeting your tax-reporting obligations as trustee.
The Private Wealth Law Team at Chamberlains Law Firm have legal expertise in a range of trusts and tax issues, including in relation to family trusts. If you have a family trust or are considering establishing one, we are here to help answer any of your legal questions.
[1] Deputy Commissioner of Taxation v Widdup (No 2) [2023] FCA 377 (‘Widdup’).
[2] Income Tax Assessment Act 1936 (Cth) sch 2F s271-15; Family Trust Distribution Tax (Primary Liability) Act 1998 (Cth).
*This article was prepared with the assistance of Matthew Foster*