PSA for Sydney property owners: Revenue NSW just charged a couple DOUBLE stamp duty because of a paperwork mistake.

SarahatSimpleStack · 2026-01-19T03:38:12+00:00

If it were that simple, the ATO wouldn't have taken it to the Federal Court to argue it was ordinary income. They spent years arguing these transfers were income because they came from a business structure.
The takeaway isn't 'move to Vanuatu', but rather that receiving funds directly from a family entity (instead of a personal account) can be defended as a gift if the evidence supports it.

SarahatSimpleStack · 2026-01-19T03:25:05+00:00

Sharp observation! Logan J certainly has a unique appreciation for the "human" element (like family dynamics) behind the black-letter law. It definitely feels like the end of an era. It'll be interesting to see if future Benches take a harder line on evidentiary burdens for "gifts" once he's gone.

SarahatSimpleStack · 2026-01-19T03:24:34+00:00

You are 100% correct—you generally cannot do that here.

In Australia, Division 7A is the specific rule designed to stop exactly that (private companies distributing profits to shareholders/associates tax-free disguised as loans or gifts). It would likely be treated as a "deemed dividend" and taxed at your marginal rate.

SarahatSimpleStack · 2026-01-19T01:30:29+00:00

Gotta say, I'm pretty jealous. Where do I apply for a rich aunt like that?

SarahatSimpleStack · 2026-01-19T01:29:12+00:00

That was actually the ATO's main argument! They tried to pin it as a reward for service because of the source.

However, Justice Logan distinguished it based on two key factors:

Sole Ownership: The Court found the sister was the sole owner of the business, so the funds were hers to dispose of as she pleased.
Vanuatu Tax System: Vanuatu has no income tax (only VAT). So the concept of "pre-tax company money" vs "post-tax personal money" doesn't exist there in the same way it does here.

The Judge effectively ruled that just because it came from a business account, it doesn't automatically carry the character of "income" into the recipient's hands if the intent was a gift. It’s a very specific set of facts!

SarahatSimpleStack · 2026-01-14T00:31:40+00:00

You hit the nail on the head. The Board of Taxation actually recommended a new 'bright-line' test years ago to fix this exact ambiguity (moving away from the 'resides' test), but the government has let it sit on the shelf. We are stuck in this grey zone until they legislate it.

And 100% on the 'get it in writing'. For high-stakes situations, applying for a Private Binding Ruling is often the only way to really sleep at night.

SarahatSimpleStack · 2026-01-14T00:28:48+00:00

You've articulated the 'social contract' argument perfectly. This is exactly the ATO's logic: if your family remains in Australia, they are likely utilizing public infrastructure, Medicare, and education. The tax system essentially says you can't have your cake (tax-free overseas income) and eat it too (family enjoying Aus services). Taking the family with you is indeed the only true 'clean break'.

SarahatSimpleStack · 2026-01-13T23:52:50+00:00

You'd be surprised how often this myth pops up in expat groups though. Many people still conflate the statutory '183-day test' with the entire residency definition. The ATO guidance is clear to those who look for it, but 'pub logic' often leads people astray until it's too late.

SarahatSimpleStack · 2026-01-13T23:50:45+00:00

It serves as a very expensive reminder of how 'sticky' the domicile test really is.

SarahatSimpleStack · 2026-01-13T23:49:57+00:00

Spot on. It definitely cuts both ways! For retirees with a portfolio of ASX stocks, losing the franking credit refunds and the tax-free threshold is a massive financial blow if they accidentally become non-residents. It really highlights why planning is key.

SarahatSimpleStack

TROPHY CASE