Hi Im about to finalize my divorce settlement and will have a sizable amount of money with which I hope to put a deposit on a house in the next 12 months I am wondering how I should go about banking this large amount and will i have to pay tax on it now or just on the interest ?

Hi Lee,
You will be required to pay tax at your marginal rate on any interest earned on the money once you have it in a term deposit or online savings account. Whether you are likely to have to pay capital gains tax on your payout in the settlement depends on where the money is derived from. If it is proceeds from your family home or your ex-partners super, there should be no tax payable, however if it is from the valuation of investments or a business it is possible that you will incur tax and you should get expert advice before doing anything with the funds.
Good luck with your future investments and your next home!
Regards
Scott

Hi Lee,

As per the above response the tax consequences will depend on where the proceeds are coming from and if they have already had tax applied or the funds are tax free until such time that is is sitting in an investment or bank account. It is best to speak with a tax professional to understand your obligations and ensure you are doing the right thing to avoid any unnecessary penalties or costs going forward.
Good luck with the purchase of your new property and hopefully things go well for you after the settlement.

Thanks,

Ronald Pratap
Principal Financial Adviser
RP Wealth Management
Level 2, 351 Oran Park Drive, Oran Park 2570
T: 02 9188 1547 M: 0434 502 079
E: ronald.pratap@rpwealthmanagement.com.au
W: www.rpwealthmanagement.com.au
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Hi Lee

Proceeds from a divorce settlement is not taxable income and you do not pay tax on this amount.

If you use the funds to invest, then the income received from the investment is taxable income to you and must be declared on your tax return.

Hope this makes sense

Kind regards
Jenny Thai
JTR & Associates