A stinging case for reviewing your asset protection planning

An over-riding goal of asset protection planning is to split personal wealth assets from business risks.  A common strategy has therefore been to have the non-working non-risk spouse hold the family home in their name.

This strategy has worked well.

Until that is the recently decided case of the Commissioner of Taxation v Bosanac.

In this case, the Australian Taxation Office was successful in recovering tax debts of Mr Bosanac against the family home despite the fact that Mr Bosanac’s name was not listed on title.  And it never was from the time the house was bought 15 years ago in 2006.

The key facts were:-

• The house deposit was paid from a joint bank account.
• The house was subsequently used as security for other loans.
• The couple lived in the house for 9 years until they separated. Thereafter the wife continued to live in the house.
• The husband subsequently used the house as security to fund share trading.

The Federal Court decided that on the basis of what they saw as objective facts, the property had always been held by both husband and wife.  Moreover, it seems unlikely that the case will be appealed to the next and highest court, the High Court, as the presiding Federal Court relied on precedents from the High Court.

It is of great concern that a prime asset protection strategy may no longer be effective.  Asset protection (including estate planning) is never a set and forget matter.  And with so much economic harm inflicted by covid on small business around Australia solvency risks have increased, arguably greatly so for some.

Now is a great time to review your asset protection strategies.  We welcome the opportunity to assist you and ensure that your family’s wealth is not left open to creditors.

At MRS, we will spend today planning for your success.