When a family’s life spans mainland China or Taiwan and Australia, a death, an illness, a separation or a move can raise Australian succession, property, family law and tax questions alongside questions under mainland Chinese or Taiwan law. The five case studies below show how those issues tend to surface, how they can be worked through in order, and what families can plan for in advance.
Please note: each case is a composite drawn from common patterns, with names and details changed. None describes a particular client, and no outcome can be guaranteed. The right approach always depends on the family’s own facts.
Case 1: A Shanghai entrepreneur’s Melbourne apartment
The situation
Consider a typical situation. A businessman living in Shanghai dies unexpectedly. Years earlier he bought an apartment in Melbourne in his sole name while his son studied there. The son, now working in Melbourne, still lives in it. His widow and daughter live in Shanghai.
He had signed a Victorian Will leaving the apartment to his wife. In Shanghai, the family has started the inheritance notarisation process for his assets in mainland China and assumes that the Chinese inheritance notarial certificate (继承权公证书) will also allow the apartment to be transferred. Relatives have heard that inherited property sold within two years is free of capital gains tax.
Legal issues spotted
- Which document controls the Melbourne apartment. Land in Victoria passes under Victorian law. A Chinese notarial certificate is not a grant of probate and cannot be resealed in Victoria. The executor needs a grant from the Supreme Court of Victoria before the title can be dealt with.
- An executor overseas. If the named executor lives in Shanghai, the family must decide whether she applies herself or appoints an attorney in Australia to apply on her behalf. Either way, her documents need to be signed and witnessed in a form the Victorian court accepts.
- A beneficiary in occupation. The son is living in an asset that the Will gives to his mother. The executor must deal fairly with outgoings, insurance and any agreement about occupation.
- The two-year rule. The full capital gains tax exemption for selling an inherited dwelling within two years of death generally depends on the deceased’s main residence history and residency status. Here the apartment was not his home, and he was not an Australian resident, so the family should not assume the exemption applies.
- FIRB. Since 1 January 2021, a foreign person who acquires an interest in Australian residential land under a Will is no longer exempt from the foreign investment rules. The widow, a foreign person, will generally need foreign investment approval before the apartment is transferred to her. Approval may come with conditions, and the policy settings for established dwellings at the time must be checked.
How the matter was approached
- The Shanghai lawyers and notary office dealt with the mainland Chinese assets. We focused on the Victorian grant, in English and Mandarin, and the family received one timetable covering both places.
- The executor’s affidavits and identity documents were prepared for signing in Shanghai, with certified translations of the Chinese death certificate and relationship documents.
- The son and the executor agreed in writing on outgoings and on vacating the apartment if it was sold.
- An Australian tax adviser modelled two options: transferring the apartment to the widow (subject to FIRB) or selling it during administration. The adviser also covered foreign resident capital gains withholding on any sale.
What the family learned
Consistent Wills for each jurisdiction make the order of steps clearer, and FIRB and capital gains tax should be checked before deciding who inherits Australian real estate. The “two-year” rule of thumb is often misapplied to foreign residents. Related reading: Using Overseas Probate Documents to Claim Australian Assets and Foreign Beneficiary Exclusion Clauses in Wills and Testamentary Trusts.
Case 2: A Taipei founder’s Australian subsidiary after incapacity
The situation
A founder in Taipei controls a family manufacturing group. Its Australian subsidiary imports and distributes the group’s products. The founder is one of the Australian company’s directors. His elder son and daughter sit on the boards in Taiwan, and a long-serving Melbourne manager is the director ordinarily resident in Australia.
After a stroke, the founder can no longer make decisions. His two children disagree on whether to expand the Australian business or wind it down. Bank mandates, a lease renewal and a supplier contract stall because nobody is sure who can sign.
Legal issues spotted
- Powers of attorney do not cross borders automatically. An ordinary power of attorney may not be relied on after the person who granted it loses capacity. Taiwan has a court-based guardianship system and, since 2019, voluntary guardianship contracts. A Taiwan arrangement does not automatically operate as a Victorian enduring power of attorney. If the founder holds assets in Victoria personally, VCAT may need to appoint an administrator.
- A directorship is a personal office. An attorney cannot simply step into the founder’s role as a director. The company’s constitution, the replaceable rules on alternate directors and the requirement under the Corporations Act that a proprietary company have at least one director ordinarily resident in Australia all need review.
- Directors’ duties continue. The remaining directors must still act in the company’s interests and meet its obligations while the family disagrees.
- The deadlock begins in Taiwan. The shares in the Australian company are held by the Taiwan parent company, so the Australian board’s direction depends on decisions made in Taiwan.
How the matter was approached
- We reviewed the Australian company’s constitution, ASIC records, bank mandates and signing authorities. Day-to-day operations were stabilised within the existing powers.
- The family’s Taiwan lawyers advised on guardianship and on the parent company’s governance. We coordinated so that the Australian steps followed the Taiwan decisions rather than getting ahead of them.
- The siblings agreed to a confidential mediation conducted in Mandarin, with their Taiwan advisers available, focused on the Australian business and on how future decisions would be made.
- The agreement reached at mediation was then recorded in a shareholders’ agreement and board protocols. These covered board composition, reserved matters, deadlock resolution and what happens if a shareholder or director loses capacity or dies.
What the family learned
Succession planning for a family business needs personal documents (enduring powers of attorney in each relevant place) and corporate documents (constitutions, shareholders’ agreements, alternate director arrangements). Mediation in the family’s own language helped keep the dispute private. See Cross-Border and Chinese-Language Mediation and Apostille for a Power of Attorney or Will From Australia to Asia.
Case 3: A Hangzhou family’s money in a Melbourne home
The situation
Parents in Hangzhou sent most of the purchase price of a Melbourne house to their daughter, and the house is registered in her name. Her husband contributed some of the mortgage repayments. Eight years later, the marriage breaks down.
The parents say the money was a loan that must be repaid. The husband says it was a gift to the couple. Her younger brother is about to marry, and the parents want to avoid a repeat.
Legal issues spotted
- Loan or gift. In a property settlement under the Family Law Act 1975, the court looks at what was actually intended and done. Relevant evidence includes written loan terms, whether interest was charged, whether any repayments were made and whether repayment was ever demanded. An undocumented family “loan” is often treated as a gift or as a financial contribution made on behalf of one party.
- Disclosure. Both parties have a continuing duty of full and frank disclosure. Bank records, transfer records and correspondence from mainland China must be produced and translated.
- The parents’ position. If the parents claim a debt, their evidence will be examined, and third parties are sometimes joined to proceedings.
- Planning for the son. A binding financial agreement can be made before or during a marriage. It is binding only if strict requirements are met, including independent legal advice to each party.
How the matter was approached
- We assembled a document trail covering the transfers out of mainland China, the Australian bank deposits, the purchase contract and messages about the money. Certified translations were obtained, and gaps filled with bank records from China.
- A valuer gave a current market valuation of the house, and an accountant reconstructed the contributions to the mortgage.
- After disclosure, the parties attended a mediation in English and Mandarin with lawyers present. The aim was a settlement without a public hearing.
- Separately, the younger son and his fiancée each obtained independent advice on a binding financial agreement, and the parents documented any future funding properly.
What the family learned
If parents intend a loan, it should be documented, and the documents should be followed in practice. Where wealth needs protecting, a binding financial agreement with independent advice for each party is more reliable than assumptions about family money. See Family Advances: Loan or Gift? and Prenuptial Agreements for Wealthy Families.
Case 4: A Guangzhou family, two tax systems and a Hong Kong account
The situation
A family from Guangzhou moved to Melbourne. The wife and children settled in Australia, but the husband still spends long periods in Guangzhou running the family business, keeps his household registration there and holds an investment account in Hong Kong SAR.
The family received a notice from the local tax bureau in mainland China asking the husband to review his overseas income. The family had assumed the move ended his tax obligations there. Neither spouse had a Will.
Legal issues spotted
- Residence in two places. Mainland China taxes residents on their worldwide income, and residence turns on domicile or time spent there. Australia has its own residency tests. The husband may be a resident of both countries under their domestic rules, so the tie-breaker in the Australia–China tax treaty and the foreign income tax offset rules become relevant.
- CRS reporting. Under the Common Reporting Standard, financial institutions in Hong Kong SAR report accounts held by tax residents of mainland China. Tax authorities in China have used this information to ask residents to review their overseas income.
- Coordination. Any correction in mainland China needs to be consistent with what is reported in Australia, and vice versa.
- No Wills. If either spouse died, assets in Australia, mainland China and Hong Kong SAR would each pass under different rules and processes.
How the matter was approached
- The family’s tax adviser in mainland China dealt with the self-review and any correction there. Their Australian tax adviser reviewed the husband’s Australian residency and reporting.
- We coordinated the timetable and information flow so that both advisers worked from the same facts and documents.
- Each spouse then made an Australian Will covering Australian assets. Separate arrangements for mainland China and Hong Kong SAR were made with local lawyers, with clauses limiting each Will’s scope so that no Will revoked another by accident.
What the family learned
Leaving mainland China does not automatically end tax residence there, and CRS means that offshore accounts are visible to the tax authorities. Families should get tax advice in both places before the move or soon after it, and should make Wills for each place at the same time. See Living in Australia but Still a China Tax Resident? and CRS and Mainland China’s Overseas Income Checks.
Case 5: A Kaohsiung widow, two children and a Melbourne property
The situation
A widow living in Kaohsiung owned a Melbourne investment property. Her son lives in Brisbane, and her daughter cared for her in Kaohsiung. Her Australian Will left the Melbourne property entirely to her son. Her assets in Taiwan passed under Taiwan law.
After her death, the daughter was surprised and hurt. She understood that under Taiwan’s Civil Code each child has a reserved share (特留分) that a Will cannot remove, and she expected the Melbourne property to be counted. The son felt bound to respect the Will.
Legal issues spotted
- Forced heirship meets Australian property. Under Taiwan’s Civil Code, the reserved share of a child or spouse is one-half of that person’s intestate share. Victorian law has no forced heirship. Victorian land generally passes under the Victorian Will and Victorian law, so how far a reserved share claim can reach it needs advice in both places.
- Family provision. In Victoria, a child may apply for family provision from the estate. The application must generally be made within six months after the grant of probate. The court considers the child’s needs and the deceased’s moral duty, including care given.
- Taiwan estate tax. Under Taiwan’s Estate and Gift Tax Act, the worldwide estate of a person domiciled in Taiwan is generally subject to estate tax, so the Melbourne property must be included in the return. Australia has no inheritance tax, but capital gains tax rules still apply when the property is sold.
- FIRB again. If any settlement gives the daughter, who lives in Taiwan, an interest in the Melbourne property, foreign investment approval may be required.
How the matter was approached
- The executor obtained a Victorian grant, and the family waited for the family provision period to pass or for any claim to be resolved before distributing the estate.
- The family’s Taiwan lawyer and accountant dealt with the reserved share position and the Taiwan estate tax return. An Australian valuer and tax adviser supplied the property’s value and the capital gains tax position.
- Both children agreed to a confidential mediation in Mandarin, where the daughter’s years of care and the son’s wish to honour the Will could each be heard.
- The settlement was recorded in a deed of family arrangement providing for the property’s sale and a payment to the daughter from the proceeds. This avoided a FIRB application, and stamp duty and tax were checked before signing.
What the family learned
A Will that is valid in Australia can still collide with expectations formed under Taiwan law. Explaining the reasons for a Will during one’s lifetime, or making a letter of wishes, and coordinating the Taiwan and Australian Wills reduces the risk of a dispute. Where a dispute arises, mediation can protect family relationships as well as money. See Assets in Australia and Overseas: Do You Need More Than One Will? and Who Can Challenge a Will in Victoria, and When?
Common threads: practical points
- Australian assets need Australian processes. Notarial certificates and foreign court documents are rarely enough on their own to deal with Australian land, shares or bank accounts.
- Check FIRB and tax before deciding who inherits. A gift that makes sense in Shanghai or Taipei may require approval, or cost more, in Australia.
- Make documents for each place together, with clauses limiting each one’s scope.
- Keep records of family money. Whether a transfer is a loan or a gift matters in divorce, in estates and for tax.
- Choose a private forum. Confidential mediation in Mandarin can often resolve matters without a public hearing.
How we can assist
Our work is the Australian side of these matters: Victorian and interstate grants, Wills and enduring powers of attorney, estate administration, family law property issues, company governance documents and mediation. We work alongside lawyers and tax advisers in mainland China, Taiwan and Hong Kong SAR, and with accountants and valuers in Australia, so that each step is taken in the right order and the family has a single, consistent picture.
Related reading
Chua Tan Associates acts for families and their professional advisers on Australian legal matters with a cross-border dimension, working alongside lawyers and tax advisers in mainland China, Taiwan and Hong Kong. To arrange a confidential consultation, please contact our Melbourne office on +61 3 9602 3988 or submit an enquiry. Advice is available in English, Mandarin and Cantonese.
Justin Chua (蔡智勋), lawyer and mediator, Chua Tan Associates, Melbourne. General information only, not legal or tax advice.
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