Private ruling: Capital gains tax - marriage breakdown and disposal of investment properties
Published: April 2012
Ruling period: Year ended 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Q1:  | A1:  | Q2:  | A2: 

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 two investment properties after 20 September 1985, property A and property B. You and your former spouse have now separated. You and your former spouse applied to the Federal Magistrates Court of Australia (the court) for a property settlement. The court issued consent orders dated late 2011. Under the consent order you and your former spouse were required to immediately list property A and property B for sale forthwith as per the conditions of the consent orders. In early 2012, you purchased your spouse's interest in property A and property B at auction. You have provided a copy of the following documentation to support your application and these documents are to be read with and forms part of your application for the purpose of this ruling: Federal Magistrates Court of Australia - Family Law Act 1975 - Consent Orders dated late 2011 Contract for sale of land - property A, and Contract for sale of land - property B.


Reasons for decision: Summary: The most common CGT event (CGT event A1) happens if you dispose of a CGT asset, or interests in a CGT asset to another entity. The time of the event is when you enter into a contract or if there is no contract, when the change of ownership occurs. Individuals who hold a CGT asset as joint tenants are treated as if they each own a separate CGT asset comprising an equal interest in the asset. As a result of a marriage breakdown and the conditions under the consent orders dated late 2011 you and your former spouse had to dispose of property A and property B. The above properties were disposed of by auction. You acquired your former spouse's 50% interest in the above properties. For CGT purposes you now have two separate interests in the above properties. | Detailed Reasoning - First interest: This is the original 50% interest that you acquired when you and your former spouse originally purchased property A and property B. The first element of the cost base of your interest in the above properties is 50% of the purchase price. | Detailed Reasoning - Second interest: This is the 50% interest of property A and property B you acquired at auction in early 2012. You acquired this 50% interest in the above properties in early 2012 when the Contracts for sale were signed. The first element of this interest in the above properties is the amount you paid to acquire them. As you did not dispose of your interest in property A and property B you are not liable for CGT. However, you will be liable for CGT upon disposal of the above properties in the future.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet. | Subject: Capital gains tax - marriage breakdown and disposal of investment properties: Question 1: Did a capital gains tax (CGT) event occur to your interest when your former spouse disposed of their interest in property A? | Question 2: Did a CGT event occur to your interest when your former spouse disposed of their interest in property B?