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PKF Australia

Accountants and Business Advisers

Family Loans and the Family Court

Family Loans and the Family Court

We love our children. We sometimes give them money to assist in buying cars, property, undertake renovations and do other things. Is it a loan or is it a gift?

At the Family Court, your ex-son in law or ex-daughter in law will argue it was a gift. If successful they end up with half of your gift. If you can successfully demonstrate it was a loan you will get your money back. 

The recent case of Rowntree v FCT (2018) FCA 182 suggests that only a legally prepared loan agreement will satisfy the Family Court. An inferred, undocumented agreement was not sufficient, despite the money being shown as a loan in the financial statements and accounts.

What to do? If you are considering giving your children money, or have already done so, contact us to arrange documenting the arrangement in a formal loan agreement. Documentation prepared after the money has already been provided will be weaker than documenting in advance but will still be better than not at all. 


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