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Edited version of private ruling
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Ruling
Subject: Marriage breakdown rollover
Question
Does the marriage breakdown rollover apply where you and your spouse enter into a consent court order that states that you sell your XX shares and transfer the proceeds to your spouse?
Answer
No
This ruling applies for the following period<s>:
Year ending 30 June 2011
The scheme commences on:
1 July 2010
Relevant facts and circumstances
You and your spouse have separated and there is no likelihood of reconciliation.
You and your spouse are in the process of drawing up a consent court order made under Part VIII of the Family Law Act 1975
The proposed agreement will outline the following;
You are to sell your XX shares.
You will transfer the proceeds in the form of a bank cheque to your spouse.
Relevant legislative provisions
Subdivision 126A of the Income Tax Assessment Act 1997
Reasons for decision
Section 126-5 of the Income Tax Assessment Act 1997 outlines that if a CGT asset or an interest in a CGT asset is transferred by a person to their spouse as a result of the breakdown of their marriage or relationship; rollover applies provided certain conditions are met.
In order for marriage breakdown roll over to apply the CGT event must happen because of an order of a court or court order made by consent under the Family Law Act 1975 or a binding financial agreement made under Part VIIIA of the Family Law Act 1975, an arbitral award or a binding agreement or award relating to the break down of relationships between spouses.
If the roll over applies, the spouse transferring the asset disregards any capital gain or capital loss they make on the transfer.
For transfers that happen because of a court order, consent order, binding financial agreement, an arbitral award or binding agreement or award relating to the breakdown of relationships between spouses, rollover only applies if:
The CGT event happens after 12 December 2006.
The spouse involved are separated
There is no reasonable likelihood of cohabitation being resumed, and
The transfer happened because of reasons directly connected with the breakdown of the marriage.
You and your spouse are separated and there is no reasonable likelihood of reconciliation. You will enter into a court order made by consent under the Family Law Act 1975 to sell the shares that you own. You will then transfer the proceeds you receive from the sale of the shares to your spouse.
Marriage breakdown roll over can only occur if the CGT asset or interest in the CGT asset is transferred to your spouse. Therefore the marriage breakdown rollover provisions do not apply to your situation.