News & Events

It’s always wise to take legal advice when preparing a will to avoid the risk of your family losing much of the gift.

Take, for example, the case of a wife, Kate. She wants to leave everything to her husband Scott, except her share portfolio, which she wants to go to their daughter Sophie.

The complication is that the family company that owns the business assets, which are to be left to Scott, also owns some of the listed company shares Kate has funded and wishes to leave to her daughter. Husband and wife each own 50 per cent of the family company shares.

Under tax law, a private company is taken to pay a dividend to an associate of the shareholder if the company transfers property to that associate for less than full market value. The definition of associate is very wide and certainly includes father and daughter.

So if Kate leaves her shares in the family company to her husband, subject to the condition that he make the company transfer the listed shares to Sophie, and assuming income tax law stays the way it is till Kate’s death – and Kate dies before her husband – Sophie’s gift will come with a hefty tax bill. The amount of the dividend is the value of the shares at the time they are transferred, assuming the net assets of the company exceed its paid-up capital by at least the amount of that value.

The dividend cannot be franked. If Sophie is on the top rate of tax when her mother dies, tax of 46.5 per cent (including Medicare Levy of $4,650 for every $10,000 value) will potentially have to be paid by her.

Please contact Tom Ellicott or Michael Dyson for assistance on or (02) 4220 7100.

Material being transported may not be defined as waste if wanted for another purpose.

In a decision that has implications for those in the recycling and resource recovery industries, a court has found that material that may be waste can be lawfully transported if it is intended for another purpose.

In the case before the court, a company had been hired by a couple to transport 680 tonnes of fill material for use in constructing a road on their 20 hectare rural property. The fill material included crushed rock, broken bricks, tiles, concrete and other inert material from demolition or excavation works.

Under environmental laws, it is an offence to transport and deposit waste material at a place that is not a waste facility.

The court found that despite being the product of demolition, the material was specifically wanted for the purpose of road construction and therefore was not waste. It said that the fact that the original party that discarded the material did not want it did not alone cause it to be waste.

Relevant to the court’s consideration was the fact that the material had been separated from other material resulting from demolition, which had been treated as waste and transported to a waste facility.

A court has recently found that even though an injured person may have contributed to a motor accident, they will still be able to make a CTP claim, though the compensation may be reduced.

The case involved a 14-year-old who ran out from behind a school bus and into the path of a motor vehicle, giving the driver no chance to avoid colliding with her. She was seriously injured and brought a claim against the driver of the vehicle. It was accepted that there was no fault on the part of the driver.

However, under the law, the driver could be deemed to be at fault – known as a blameless accident – provided there was no other person at fault, allowing the injured person to claim under the CTP insurance. At issue in the case was whether fault by any other person included that of the injured person.

The court found that the injured person could not be a person at fault in such circumstances and thus could make a claim under the blameless accident provisions. However, the court said that the compensation should be reduced by the amount that the injured person departed from the standard of care she was required to observe in the interests of her own safety. In this case, the court took into account the girl’s age and the circumstances of the accident and reduced her compensation by 50 per cent.

If it had been a drunk adult pedestrian who ran in front of a car, the compensation could well have been reduced by 100 per cent. And as a result of this case, for children aged six and below, it’s likely that they will now have complete no-fault entitlements under the motor accidents scheme due to the fact that they are not capable of being found to have contributed to the accident.