Updated: Feb 4
According to Australia’s Bankruptcy Act 1966 (“the Act”).
Transfers of property for less than market value, including transfers where no consideration at all is paid, may be challenged by a trustee in bankruptcy if the person transferring the property later becomes bankrupt.
Under the Act, “love and affection” has no value as consideration.
Although in a family business it may be a desirable strategy to have one partner hold the personal family assets (such as the family home) while the other partner bears the business risks, it is important that any interest in property that is transferred from one partner to another is done for market value and that value is paid to the transferor.
In most, if not all, States of Australia the transfer of property between spouses or domestic partners is subject to stamp duty if consideration is paid but that duty may be a small price to pay to keep a roof over your family’s heads.