ATO Interpretative Decision
ATO ID 2001/67 (Withdrawn)
Income Tax
CGT: Rollover Relief (Disposal of Shares)FOI status: may be released
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This ATO ID is withdrawn as it does not clearly explain the ATO view. Please refer to TD 99/53 and the Guide to capital gains tax for assistance with the issues dealt with in this ATO ID.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Whether Capital Gains Tax (CGT) rollover relief is available to a taxpayer under section 126-5 (Income Tax Assessment Act 1997 (ITAA 1997)) on disposal of shares that were to be transferred to the taxpayer's spouse as part of a marriage-breakdown property settlement.
Decision
No. The taxpayer is not entitled to section 126-5 (ITAA 1997) CGT rollover relief as the shares, in accordance with that provision, are not disposed of pursuant to an order of the court.
Facts
The taxpayer and the taxpayer's spouse are awaiting court endorsement of a marriage breakdown property settlement. On negotiating the settlement, they had agreed that jointly-owned shares would be transferred to the taxpayer's spouse. Subsequently, the shares were sold to preserve their value. Consistent with the agreement, the current settlement deed states that the proceeds from the sale of the shares and any interest earned on the account will pass to the taxpayer's spouse.
Reasons For Decision
Section 126-5 provides CGT rollover relief in certain instances, including, where a taxpayer disposes of an asset to their spouse pursuant to a court order. Where section 126-5 applies, the spouse is treated as acquiring the asset for its cost base (if the taxpayer acquired the asset on or after 20 September 1985) and the taxpayer disposing of the asset is not subject to CGT on the disposal of the asset.
In this case, section 126-5 cannot apply to provide rollover relief to the taxpayer as there is yet to be a court-ordered settlement. Furthermore, once the court does order a settlement, what will be disposed of is a sum of money, being the proceeds from the sale of the shares and not the actual shares themselves.
At the time of sale of the shares the taxpayer is not entitled to CGT rollover relief under section 126-5 and is, therefore, subject to tax on their share of the capital gain arising from the profit made from the sale.
Date of decision: 11 February 1999
Legislative References:
Income Tax Assessment Act 1997
section 126-5
Keywords
Capital gains tax
CGT rollover relief
Marriage breakdown
ISSN: 1445-2782
| Date: | Version: | |
| 11 February 1999 | Original statement | |
| You are here | 16 January 2004 | Archived |