Draft Taxation Determination

TD 1999/D80

Income tax: capital gains: is there roll-over under section 126-5 or 126-15 of the Income Tax Assessment Act 1997 if a CGT asset is transferred in accordance with the terms of a court order under the Family Law Act 1975 but after the time limit specified in the court order?

• Please note that the PDF version is the authorised version of this draft ruling.
  This document has been finalised by TD 1999/54.

FOI status:

Not previously released in draft form

Preamble

1. Yes. A CGT event A1 (about disposals of CGT assets) in section 104-10 of the Income Tax Assessment Act 1997 (ITAA 1997) happens on a transfer of a CGT asset by one spouse to another. If the asset is transferred in accordance with a court order under the Family Law Act 1975, even if the transfer occurs after the time limit specified in the court order, we accept for capital gains purposes that the CGT event happens 'because of' the court order. In essence, the CGT event - namely the transfer of the CGT asset - is caused by the court order even if it is done later than the court order requires. There is roll-over under section 126-5 or 126-15 of the ITAA 1997.

Example

2. A court order requires Bill to transfer 100 XYZ Corp shares to his spouse, Linda, within 3 months. The shares are transferred 4 months later. There is roll-over on the transfer of the shares, despite the transfer happening after the period specified in the court order.

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.

Commissioner of Taxation
18 August 1999

References

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

Subject References:
asset
CGT asset
CGT event
CGT event A1
court order
roll-over
spouse
time limit
transfer

Legislative References:
ITAA 1997 104-10
ITAA 1997 126-5
ITAA 1997 126-15
FLA 1975 87