Revised Explanatory Memorandum
(Circulated by authority of the Attorney-General, the Honourable Philip Ruddock MP)Section 1 - General Outline
The Bill will make a number of significant changes to the Family Law Act 1975 (the Family Law Act) and the Bankruptcy Act 1966 (the Bankruptcy Act). These changes will implement a number of key recommendations made in the Joint Taskforce Report on the Use of Bankruptcy and Family Law Schemes to Avoid Payment of Tax.
The objects of this Bill are to:
- (a)
- address longstanding issues concerning the interaction between family law and bankruptcy;
- (b)
- prevent the misuse of financial agreements as a means of avoiding payment to creditors; and
- (c)
- provide a more effective means of collecting income contributions from bankrupts who do not receive their income as a salary or wage.
Schedule 1 contains amendments designed to clarify the interaction between family law and bankruptcy.
Schedule 2 introduces a new supervised account regime to improve the bankruptcy trustee's ability to collect assessed income contributions.
Schedules 3 and 4 contain amendments designed to prevent people using financial agreements under Part VIIIA of the Family Law Act to defeat the claims of creditors.
Schedule 5 contains amendments designed to clarify the role of third parties in financial matters under the Family Law Act, and to require a separation declaration before certain financial agreements under Part VIIIA of that Act, come into effect. These amendments are also aimed at preventing the use of family law procedures to defeat the claims of creditors.
Financial Impact Statement
The amendments proposed by this Bill will have no significant financial impact.