• Creation cases

    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    If the CGT event involved is the creation of an asset in you by your spouse, a company or a trustee, the first element of the cost base or reduced cost base of the asset is as follows:

    CGT event

    Cost base or reduced cost base

    Creating contractual or other rights (D1)

    incidental costs incurred by the transferor that relate to the event

    Granting an option (D2)

    expenditure incurred by the transferor to grant the option

    Granting a right to income from mining (D3)

    expenditure incurred by the transferor to grant the right

    Granting a lease (F1)

    expenditure incurred by the transferor on the grant, renewal or extension of the lease

    You acquire the asset at the time specified by the CGT event. For example, for CGT event D1, you acquire the asset at the time you enter into the contract or, if there is no contract, the time the right is created. For more information, see the list of CGT events in appendix B.

    Example

    Transfer of assets from a legal or a de facto marriage

    Danny and Claudia jointly owned the following assets immediately before their marriage breakdown:

    The family home

    Purchased January 1985

    Cost

    $75,000

    Furniture

    Purchased between January and June 1985

    Cost

    $15,000

    Holiday home

    Purchased December 1998

    Cost

    $65,000

    Shares in a company

    Purchased March 1999

    Cost

    $35,000

    On their divorce in October 2000, the Family Court approved the couple's voluntary asset agreement and made an appropriate court order by consent.

    Claudia received the family home and the furniture. Because these assets were acquired by the couple before 20 September 1985, she is taken to have acquired her share of the home and furniture before that date. She is also taken to have acquired Danny's share in those assets before that date. Claudia would not have to pay tax on capital gains on those assets.

    Danny is not subject to tax on the capital gain on the transfer to Claudia of his share in these assets.

    Danny received the holiday home - which did not become his home - and the shares.

    Although the couple acquired these assets after 20 September 1985, as a result of the court order Claudia does not have to pay any tax on the capital gain on the transfer of her share of these assets to Danny.

    Danny is taken to have acquired Claudia's share of these assets, at the time of transfer, or her relevant cost base. However, if he were to sell the holiday home or the shares, he could calculate his capital gain or capital loss by working out the cost base of the whole of the holiday home, or the whole of the shares, at the time he and Claudia jointly acquired them. He would then deduct this amount, after indexation if he makes a capital gain, from the proceeds he receives.

    Last modified: 18 Sep 2009QC 18323