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Chris The Lawyer
Chris The Lawyer, Lawyer
Category: New Zealand Law
Satisfied Customers: 22961
Experience:  38 years qualified as a lawyer; LLB, MMgt and FAMINZ.
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My father is going through a divorce. His partner is trying

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My father is going through a divorce. His partner is trying to claim 50% of their assets but not accepting responsibility for any debts/liabilities. The debt in dispute is a very large tax bill relating to a Company that generated 90% of the income to buy their matrimonial assets. She is stating that because she is not a shareholder or director of the Company that the debt relates too she should not have to contribute to pay the debt not even her share of the matrimonial assets.

My question is, is she obliges to pay for half of the tax debt because the tax debt of the Company is part of matrimonial property?

christhelawyer : HiWelcome to JustAnswer. My first response will follow shortly. Please feel free to follow up if anything is not clear
christhelawyer : If the tax bill is owed by the company then the debt will reduce the value of the company. Is it owed by the company or your father personally?

It is owed by the Company. Unfortunately there is significant in the Company besides the shareholders advance which is all the my father and the actually funds have been used to purchase the family home etc.


Sorry meant to say significant assets in the Company and my father is the sole director and shareholder of the Company

christhelawyer : Will the company be able to pay the tax?

No as there is no assets. I fear Dad will be made responsible as he is the sole director.


Does matrimonial law state that all matrimonial assets and liabilities need to be split equally?

christhelawyer : If the tax debt is owed just by the company, which cannot pay the tax, then the company may need to be liquidated. But the directors are not liable for company tax, so your father will not be liable.
christhelawyer : This means that the debt will not be owed by him in most such cases.

Yes but that would mean that the director has traded the company into liquidation and possibly when the company is insolvent We do want to pay the tax.

christhelawyer : I understand that but the company debt is separate from personal debt, and where you cannot pay the tax, you are better off liquidating the company.
christhelawyer : this means the assets like the home and chattels will need to be divided equally.

But if we didn't want to does the matrimonial act state that both parties need to contribute equally to it?

christhelawyer : The company is a separate legal entity form the individuals. What she has a claim to are the company shares, and if the tax debt means the shares are valueless, then she has no real claim to that asset. However the other personal assets are still divided equally. You cannot use the company debt to offset the personal assets.

Eventhough the personal assets were gained by the profits from the Company that owes the debt?

christhelawyer : I am afraid so.

Can the Company claw back the shareholders drawings taken to purchase the matrimonial assets?

christhelawyer : That would depend on how the drawings were taken in the company books. If they were taken as shareholders advances thenossibly yes.
christhelawyer : *then possibly yes

Thanks. Then how can the other party claim only the assets of the Company?

christhelawyer : It will depend on how the advances were made and you would need to discuss this with your accountant. But you may have a point, that if she is liable for money owed to the company then this will affect what she gets. But if the shareholders advances are repaid then this will not affect her claim to the half share in the personal assets and just mean more of the tax is paid.
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Customer: replied 4 years ago.

Hi another matter in this situation is the sale of a rental property owned by both parties. Both parties want to sell by using an independent real estate agent to market the property, but the other party doesn't want to allow the other party to buy the property even if the highest price is offered.


My question is can you discriminate someone from buying this property?

Usually the best way around this is to buy through a trusted 3rd party. That is the practical answer, but because of the need to get consent of both, she could block the sale to him. Court ours could get around this but with loss of time and with extra costs
Customer: replied 4 years ago.

I would have thought that kind of discrimation was against Human rights act or something?

In sales of property you can choose who you sell to, subject to the rules about discrimination. But you can choose to not sell to your ex just to be difficult