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Draft Taxation Determination

TD 1999/D79

Income tax: capital gains: if a CGT asset is transferred by agreement between spouses and a court order later sanctions its transfer, was the original transfer of the asset made 'because of' the court order in terms of section 126-5 or 126-15 for roll-over to apply?

  • Please note that the PDF version is the authorised version of this draft ruling.
    This document has been finalised by TD 1999/53.

FOI status:

Not previously released in draft form

Preamble

Draft Taxation Determinations (DTDs) present the preliminary, though considered, views of the Australian Taxation Office. DTDs should not be relied on; only final Taxation Determinations represent authoritative statements by the Australian Taxation Office.

1. No. A CGT asset transferred between spouses by agreement, before a court order made under the Family Law Act 1975 or a State, Territory or foreign law relating to de facto marriage breakdowns, is not transferred 'because of' the court order. The court order does not cause the CGT event (the transfer) to happen. Therefore, there is no roll-over under section 126-5 or 126-15 of the Income Tax Assessment Act 1997 for the CGT event that happens on the original transfer of the asset.

Note

2. You need to distinguish between a transfer of a CGT asset between spouses by agreement (as a result of which there is a change of ownership of the asset) and a spouse giving possession of a CGT asset to the other spouse. If possession only is given and there is no provision by which title in the asset will or may pass, no roll-over is needed at that stage because no CGT event happens. If possession only is given and a court order later sanctions transfer of the asset involved, CGT event A1 would happen because of the court order and roll-over would apply.

Your comments

3. We invite you to comment on this Draft Taxation Determination. We are allowing 4 weeks for comments before we finalise the Determination. If you want your comments considered, please provide them to us within this period.

Comments by Date: 15 September 1999
Contact officer details have been removed following publication of the final ruling.

Commissioner of Taxation
18 August 1999

References

ATO references:
NO 99/19509-6
BO CGT marriage breakdown summit 1999

ISSN 1038 - 8982

Subject References:
asset
CGT asset
CGT event
CGT event A1
court order
ownership
possession
roll-over
spouse
transfer

Legislative References:
ITAA 1997 126-5
ITAA 1997 126-15
FLA 1975 87


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