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Ruling
Subject: Capital gains tax
Question and answer:
Are you entitled to disregard any capital gain or loss that results from the disposal of your residence?
Yes.
This ruling applies for the following periods:
Year ended 30 June 2012
Year ended 30 June 2013
Year ended 30 June 2014
Year ended 30 June 2015
The scheme commenced on:
1 July 2011
Relevant facts
Your spouse purchased a residence pre-CGT.
Your spouse was listed as the sole owner on the title deeds of the property.
You separated from your ex-spouse and post-CGT divorced proceedings were finalised.
As a consequence of the divorce your ex-spouses interest in the property was transferred solely to you as a result of a court order made under the Family Law Act 1975 (FLA 1975).
You have continued to reside in the residence.
You are intending to dispose of the residence.
Relevant legislative provisions
Income Tax Assessment Act 1997, Section 102-20
Income Tax Assessment Act 1997, Subsection 104-10(5)
Income Tax Assessment Act 1997, Subsection 126-5(1)
Income Tax Assessment Act 1997, Subsection 126-6(6)
Reasons for decision
Section 102-20 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that you make a capital gain or loss as a result of a capital gains tax (CGT) event happening to a CGT asset. Under subsection 104-10(5) of the ITAA 1997, generally you are entitled to disregard any capital gain or capital loss you make on the disposal of an asset that you acquired before 20 September 1985.
Marriage breakdown rollover
Where an asset is transferred to a spouse as a result of a marriage breakdown, there is an automatic rollover for the transferring spouse if certain conditions are met. The roll-over conditions are met if a CGT event occurs because of a court order under the FLA 1975, under subsection 126-5(1) of the ITAA 1997.
If a CGT asset was acquired by the transferor spouse prior to 20 September 1985, the transferee spouse is also taken to have acquired the asset prior to that date under subsection 126-5(6) of the ITAA 1997.
Your ex-spouses interest in the property was transferred to you after a marriage breakdown as a result of a court order under the FLA 1975. Therefore, the transfer of the interest qualifies for the marriage breakdown rollover under subsection 126-5(1) of the ITAA 1997. As your former spouse acquired the property pre-CGT, you are also taken to have acquired your interest in the property pre-CGT.
Accordingly, under section 104-10(5) of the ITAA 1997 any capital gain or loss that results from the disposal of the property is disregarded.