Disclaimer
This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of your private ruling

Authorisation Number: 1012480760445

Ruling

Subject: Capital Gains Tax - marriage breakdown - disposal of investment properties

Question: Are the proceeds from the disposal of your investment properties apportioned on your ownership interest in the properties?

Answer: Yes.

This ruling applies for the following period

30 June 2013

The scheme commences on

1 July 2012

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

You and your former spouse jointly acquired a number of investment properties:

You and your former spouse names are listed on the Certificate of Title on the investment properties.

You and your former spouse are now divorced.

The Final Orders (the orders) from the Family Court were issued early this year.

Under a paragraph of the orders it states the percentage rates each party is to receive from the disposal of the investment properties.

You have calculated your capital gain made on the disposal of the investment properties with you and your spouse each owning a 50% interest and the percentage rates as per the orders:

You have supplied a copy of the following documentation to support your application and this documentation is to be read with and forms part of your application for the purpose of this ruling:

calculations of capital gain made on the disposal of investment properties, and

Final Order - The Federal Magistrates Court of Australia.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 104-10

Income Tax Assessment Act 1997 Section 108-7

Income Tax Assessment Act 1997 Section 126-5

Reasons for decision

While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision.

You make a capital gain or capital loss when a capital gains tax (CGT) event happens to a CGT asset.

The most common CGT asset is a CGT event A1 which occurs when you dispose of a CGT asset. The time of the event is when you enter into the contract for its disposal or if there is no contract when the change of ownership occurs.

CGT event A1 occurred when the investment properties was disposed of.

For CGT purposes, individuals who own a CGT asset as joint tenants are treated as if they own a separate CGT asset with each holding identical interests (50%) in the property. Any capital gain or capital loss is split equally between the individuals.

Court orders or consent orders made under the Family Law Act 1975 that stipulated a percentage amount each party is to receive from the disposal of assets does not affect how the CGT legislation is applied to properties acquired jointly. Apportionment of the proceeds for CGT purposes is made according to the legal interests registered on the title.

In your case, you owned a 50% interest in the investment properties but the courts have apportioned the proceeds from the disposal of the properties with you receiving an X% share and your former spouse receiving an X% share.

Therefore, in accordance with your ownership interest, you are liable for 50% of the capital gain made on the disposal of the investment properties.