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Edited version of your written advice
Authorisation Number: 1051215213989
Date of advice: 18 April 2017
Ruling
Subject: Marriage breakdown roll-over
Question 1
Are you liable for any capital gain made on the shares being transferred into your name on the date of transfer?
Answer:
No.
Question 2
Are you liable for any capital gain made on the shares being transferred to your former spouse on the date of transfer?
Answer:
No.
This ruling applies for the following period(s)
Financial year ending 30 June 2016
The scheme commences on
1 July 2015
Relevant facts and circumstances
A marriage breakdown occurred.
A consent order was made under the Family Law Act 1975 in the 2015 financial year. The order provided that you and your former spouse would divide a share portfolio you held in joint names, in specie, equally between you.
The split and transfer of the shares into your individual names occurred in the 2016 financial year.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subdivision 126-A
Income Tax Assessment Act 1997 Section 126-5
Reasons for decision
Marriage or relationship breakdown roll-over
A same asset roll-over involves the transferral of an asset from one taxpayer to another. It allows a taxpayer to defer the making of a capital gain from such a CGT event until such time as a later event occurs in respect of the asset.
Subdivision 126-A of the ITAA 1997 considers same asset roll-overs in the context of marriage breakdown. Section 126-5 of the ITAA 1997 states there is a roll-over if a CGT event (the trigger event) happens involving an individual (the transferor) and his or her spouse (the transferee), or a former spouse (also the transferee) because of:
(a) a court order under the Family Law Act 1975 or under a State law, Territory law or foreign law relating to breakdowns of relationships between spouses; or
(b) a maintenance agreement approved by a court under section 87 of the Family Law Act 1975 or a corresponding agreement approved by a court under a corresponding foreign law; or
(c) (Repealed by No 144 of 2008)
(d) something done under:
i. a financial agreement made under Part VIIIA of the Family Law Act 1975 that is binding because of section 90G of that Act; or
ii. a corresponding written agreement that is binding because of a corresponding foreign law; or
(da) something done under:
i. a Part VIIIAB financial agreement (within the meaning of the Family Law Act 1975) that is binding because of section 90UJ of that Act; or
ii. a corresponding written agreement that is binding because of a corresponding foreign law; or
(e) something done under:
i. an award made in an arbitration referred to in section 13H of the Family Law Act 1975; or
ii. a corresponding award made in an arbitration under a corresponding State law, Territory law or foreign law; or
(f) something done under a written agreement:
i. that is binding because of a State law, Territory law or foreign law relating to breakdowns of relationships between spouses; and
ii. that, because of such a law, 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.
Subsection 126-5(4) of the ITAA 1997 states that a capital gain or a capital loss the transferor makes from the CGT event is disregarded.
In your case, the trigger event is the CGT event pertaining to the disposal of the shares. Based on the information provided, the transfer of the shares happened because of a consent order under the Family Law Act 1975.
Accordingly, the roll-over provisions in Subdivision 126-A of the ITAA 1997 will be available to you and will apply to the transfer of the shares. Therefore, any capital gain or capital loss made by you will be disregarded under subsection 126-5(4) of the ITAA 1997.
For the shares transferred to you there is no CGT event and no capital gain or loss to be determined.
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