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  • Relationship breakdown and capital gains tax

    When two people separate or divorce, assets transferred between them usually qualify for the relationship breakdown rollover.

    This means capital gains tax (CGT), which normally applies when ownership of an asset changes, is deferred. CGT will apply to the person who received the asset when they later dispose of it.

    If an asset is transferred to you because of a relationship breakdown:

    • the rollover applies only if the asset is transferred under a court order or other formal agreement
    • when you dispose of a rollover asset, you calculate your CGT as though you had owned it since your former spouse acquired it, including using your former spouse's cost base for the asset
    • if the asset is a property, you may be eligible for the main residence exemption from CGT.

    If the rollover applies to an asset, you must use it.

    Last modified: 04 Aug 2021QC 66063