Bankruptcy Legislation Amendment (Anti avoidance and Other Measures) Bill 2004 - Explanatory Memorandum - 2004
The Parliament of the Commonwealth of Australia
House of Representatives
Bankruptcy Legislation Amendment (Anti-Avoidance and Other Measures) Bill 2004
Exposure draft
Explanatory Memorandum
(Circulated by authority of the Attorney-General, the Honourable Philip Ruddock MP)
Readers’ Guide
This Explanatory Memorandum is divided into three main sections: a general outline of the main provisions of the Bankruptcy Legislation Amendment (Anti-Avoidance and Other Measures) Bill 2004 (the Bill) (Section 1); a discussion of the main policy objectives the Bill seeks to achieve (Section 2, commencing at page 3); and a detailed discussion of each provision, item by item (Section 3, commencing at page 6).
Section 1 - General Outline
2. The Bill will make a number of significant changes to the Bankruptcy Act 1966 (the Act) and the Family Law Act 1975 (the Family Law 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.
3. The objects of this Bill are to:
(a) improve the ability of bankruptcy trustees to recover assets from bankrupts who do not own these assets personally but who have funded the acquisition of assets by third parties whilst retaining the use or benefit of those assets;
(b) provide a more effective means of collecting income contributions from bankrupts who do not receive their income as a salary or wage;
(c) prevent the misuse of financial agreements as a means of avoiding payment to creditors; and
(d) address longstanding issues concerning the interaction between family law and bankruptcy.
4. Schedule 1 contains amendments to Division 4A of Part VI of the Act. These amendments will allow a bankruptcy trustee to recover assets acquired by third parties using funds or property provided by the bankrupt where the bankrupt has used or derived a benefit from those assets.
5. Schedule 2 contains amendments designed to clarify the interaction between family law and bankruptcy.
6. Schedule 3 introduces a new supervised account regime to improve the bankruptcy trustee’s ability to collect assessed income contributions.
7. Schedules 4 and 5 contain amendments designed to prevent people using financial agreements under Part VIIIA of the Family Law Act to defeat the claims of creditors.
