The Federal Court has dismissed an application by the former wife of a taxpayer who was liable to the Commissioner for a tax debt of over id=”mce_marker”1.4m to have the tax matter currently being dealt with by the Federal Court transferred to the Family Court in Western Australia under the cross-vesting rules.
The former wife sought the transfer for the purposes of having the matter resolved in conjunction with property settlement proceedings relating to their marriage breakdown as the Commissioner was, among other things, pursuing payment of the debt from a family trust of which she was trustee in circumstances where the family trust owed the husband moneys as a beneficiary of the trust. In particular, the former wife argued that in terms of the relevant cross-vesting legislation, both matters would be best dealt with by the Family Court as the assets of the trust, which were subject of the tax matter were also a subject matter of the property settlement in the State Family Court proceeding.
However, in dismissing the former wife’s application, the Federal Court emphasised that the tax proceeding in the Federal Court did not “arise out of” the State Family Court proceedings and that there was no causal relationship between the 2 proceedings to enable it to be said that “one results, or proceeds or originates from or out of the other”. In arriving at its decision, it also noted that the tax matter in the Federal Court related to a narrow question of law (which was well progressed) and wholly unconnected to the matrimonial property issue (where the range of factual matters were considerably broader and not well progressed). Accordingly, the Federal Court concluded that it was not in the interests of justice in the circumstances for the tax matter to be determined by the State Family Court.
(FCT v Residence Riverside Proprietary Limited as Trustee for the D&J Discretionary Trust and as Trustee for the D&J Investment Trust [2013] FCA 720, Federal Court, McKerracher J, 23 July 2013.)
[LTN 142, 25/7/13]