FAMILY COMPANIES..

Auckland Star, Volume LXIII, Issue 246, 17 October 1932, Page 3

FAMILY COMPANIES..

HOW TO REDUCE TAX-PAYING. PRACTICE IN VICTORIA. By forming what is known as "family companies," many property owners obtain some measure of relief from heavy income ta,x, and later, upon death, from heavy probate duties, says a contributor to the "Victorian Law Institute Journal." A company so formed ue-ially takes over or acquires the whole of a substantial portion of the taxpayers' assets, the consideration being the allotment to nominees of the taxpayer (usually members of the family) of shares in the company, and the appointment under the articles and by agreement, cf the taxpayer as governing director, with all the powers of tie board of directors and of the company, so far as the Act permit?. The result is that a taxpayer may divest himself of the whole of the assets while retaining for the remainder of his life full dominion and control over the benefit of such assets, and the whole, or some of the income.

The contributor raises the question whether these family companies are hit by the provisions of section 176 of the Administration of Probate Act, 1928. He contends that even though the intention of the transferror is ultimately to relieve his estate from payment of probate duty in respect of property transferred to the company, the transaction is nevertheless a genuine one, which entirely divests the transferror.