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Edited version of private advice
Authorisation Number: 1012636063040
Ruling
Subject: Capital gains tax (CGT) rollover
Question
Will marriage breakdown rollover under Subdivision 126-A of the Income Tax Assessment Act 1997 (ITAA 1997) apply on the transfer of an asset from the company because of a court order under the Family Law Act 1975 (FLA)?
Yes
This ruling applies for the following periods
Year ended 30 June 2014
Year ended 30 June 2015
The scheme commences on:
1 July 2013
Relevant facts and circumstances
The company is transferring a property to a spouse as a result of a court order under the Family Law Act 1975 (FLA).
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 126-15.
Reasons for decision
Marriage breakdown rollover is available if the conditions set out in Subdivision 126-A of the ITAA 1997 is satisfied. This rollover is an automatic rollover and will apply whether or not a taxpayer chooses for it to apply (Taxation Determination TD 1999/60).
Section 126-15 of the ITAA 1997 deals with a CGT event involving a company or a trustee and a spouse or former spouse.
Subsection 126-15(1) of the ITAA 1997 provides that the roll-over consequences outlined in section 126-5 apply if the trigger event involves a company or a trustee (referred to as "the transferor") and a spouse or former spouse ("the transferee") of another individual because of:
(a) a court order under the FLA or under a state law, territory law or foreign law relating to breakdowns of relationships between spouses
(b) a maintenance agreement approved by a court under FLA section 87 or a corresponding agreement approved by a court under a corresponding foreign law
(c) before the 2009/10 income year, a court order under a state law, territory law or foreign law relating to de facto marriage breakdowns
(d) something done under a binding financial agreement made under FLA Pt VIIIA or a corresponding foreign law
(e) something done under an award made in an arbitration under FLA section 13H or a corresponding state law, territory law or foreign law, or
(f) something done under a written agreement that is binding because of a state, territory or foreign law relating to breakdowns of relationships between spouses and that prevents a court making an order about matters to which the agreement applies, or that is inconsistent with the terms of the agreement in relation to those matters, unless the agreement is varied or set aside.
In this situation, the property is being transferred to a spouse as a result of a court order under the FLA in relation to a marriage breakdown.
As such the conditions for rollover relief under Subdivision 126-A of the ITAA 1997 are met.
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