Private ruling: CGT - marriage breakdown rollover
Published: September 2017
Ruling period: Year ending 30 June 2017 | Year ending 30 June 2018
Date scheme commenced: 1 July 2016

Ruling: Q1: Will section 126-5 of the Income Tax Assessment Act 1997 (ITAA 1997) apply to the acquisition of the property? | A1: No

Relevant facts and circumstances: You and your spouse have separated. Your spouse owns an investment property. You have made an agreement with your spouse to purchase the investment property for market value consideration. The agreement is not a court order or an agreement made under the Family Law Act 1975 or any other State, Territory or Foreign law relating to breakdown of relationships between spouses.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subdivision 126-A | Income Tax Assessment Act 1997 section 126-5

Reasons for decision: Summary: Subdivision 126-A of the ITAA 1997 considers same asset roll-overs in the context of marriage breakdown. Section 126-5 of the ITAA 1997 states there is a roll-over if a CGT event (the trigger event) happens involving an individual (the transferor) and his or her spouse (the transferee), or a former spouse (also the transferee) because of: (a) a court order under the Family Law Act 1975 or under a State law, Territory law or foreign law relating to breakdowns of relationships between spouses; or (b) a maintenance agreement approved by a court under section 87 of the Family Law Act 1975 or a corresponding agreement approved by a court under a corresponding foreign law; or (c) (Repealed by No 144 of 2008) (d) something done under: i. a financial agreement made under Part VIIIA of the Family Law Act 1975 that is binding because of section 90G of that Act; or ii. a corresponding written agreement that is binding because of a corresponding foreign law; or (e) something done under: i. a Part VIIIAB financial agreement (within the meaning of the Family Law Act 1975 ) that is binding because of section 90UJ of that Act; or ii. a corresponding written agreement that is binding because of a corresponding foreign law; or (f) something done under: i. an award made in an arbitration referred to in section 13H of the Family Law Act 1975 ; or ii. a corresponding award made in an arbitration under a corresponding State law, Territory law or foreign law; or (g) something done under a written agreement: i. that is binding because of a State law, Territory law or foreign law relating to breakdowns of relationships between spouses; and ii. that, because of such a law, prevents a court making an order about matters to which the agreement applies, or that is inconsistent with the terms of the agreement in relation to those matters, unless the agreement is varied or set aside. Subsection 126-5(4) of the ITAA 1997 states that a capital gain or a capital loss the transferor makes from the CGT event is disregarded. In your case, there has been no agreement or court order made under the Family Law Act 1975 or any other state, territory or foreign law relating to breakdown of relationships between spouses, in relation to the acquisition of the investment property from your spouse, therefore the rollover available under section 126-5 of the ITAA 1997 will not apply.