The power of deeming income contributions

Investigations reveal $500k earned in 12 months.

Many are aware that the Bankruptcy Act 1966 includes extensive provisions to make bankrupts pay their bankruptcy trustee approximately one-half of their after-tax income that is above a certain threshold. That income contribution becomes a debt to the bankruptcy trustee and survives bankruptcy.

Income under the Bankruptcy Act provisions is not the same as 'income' under the Income Tax Assessment Act 1997, it includes usual wages, pensions and distributions but also includes:

• loans from associated parties
• benefits as defined under the Fringe Benefits Tax Assessment Act 1986
• income or consideration received by another party as a result of work done by the bankrupt