Mar 30, 2023

The Bosanac case involved a situation where Ms Bosanac was the sole owner of the family home but the Commissioner was arguing that she held half of her interest in the trust for Mr Bosanac, who owed a tax debt to the ATO. The High Court held that Mr Bosanac did not own a share in the property, which meant that the property was not available to Mr Bosanac’s creditors.

The property in question was acquired solely in the name of Ms Bosanac, although the purchase price was funded from joint funds and a joint loan account in the name of Ms Bosanac and Mr Bosanac.

The ATO was seeking payment of a judgement debt owed by Mr Bosanac and was trying to argue that Mr Bosanac had a beneficial interest in this property under the principles of equity. This would allow the ATO to recover part of the debt from the sale of the property.

The central dispute related to the operation of several equitable principles concerning dealings between parties where there are ‘presumptions’ that ownership interests in assets are held in a certain way, despite the legal ownership.

The Commissioner sought to take advantage of the law’s presumption, known as a presumption of resulting trust, that a person (i.e., Mr Bosanac) who advances purchase monies for property, which is held in the name of another person (Ms Bosanac), intends to have a beneficial interest in the property. That is, that Mr Bosanac should be regarded as having a beneficial interest in the property, held on trust for him by the legal owner.

However, that presumption is subject to an exception that, in the case of purchases by a husband in the name of a wife (or a parent in the name of a child), there is a presumption of “advancement” or, simply, a presumption that the purchaser (the husband, Mr Bosanac) does not intend to have any ownership interest but rather to make a gift of their contribution to the wife. In that case, the wife retains the sole beneficial ownership of the property and there is no interest in the property held on trust for the husband.

The Full Federal Court held that both Ms Bosanac and Mr Bosanac had ownership interests in the property, on the basis that Mr Bosanac did not intend his contribution to the purchase to be a gift, with the result that the ATO could seek to recover the debt.

However, the High Court overturned this decision, finding that the property was solely owned by Ms Bosanac. While the High Court indicated that the presumption of advancement is still relevant, the decision in this case was reached based on the fact parties clearly intended that the property was to be held solely by Ms Bosanac.

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