Private ruling: CGT and marriage breakdown roll-over
Date of advice: 14 October 2025
Published: 1 December 2025
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will CGT event A1 happen when the investment property is sold? | A1: Yes.

Relevant facts and circumstances: In YYYY, you acquired Property A for $XX. You held Property A in your sole name and used it as an investment. On DD MM YYYY, you and your partner jointly purchased Property B for $XX. On DD MM YYYY, you separated from your former partner. On DD MM YYYY, you commenced Family Court proceedings with your former partner. On DD MM YYYY, you sold Property A. On DD MM YYYY, you and your former partner executed consent orders in the Family Court. The consent orders dealt with the division of two properties: • Property B • Property C Property A was not included in the consent orders and was not subject to any division or adjustment under the Family Law proceedings.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 102-20 | Income Tax Assessment Act 1997 section 103-10 | Income Tax Assessment Act 1997 section 104-5 | Income Tax Assessment Act 1997 section 104-10 | Income Tax Assessment Act 1997 section 104-10(3) | Income Tax Assessment Act 1997 section 104-10(4) | Income Tax Assessment Act 1997 section 116-20 | Income Tax Assessment Act 1997 Subdivision 126-A | Family Law Act 1975

Reasons for decision: Summary: Section 102-20 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that a capital gain or capital loss arises when a capital gains tax (CGT) event occurs. A CGT event happens to a CGT asset when there is a change in ownership or another relevant transaction. The most common CGT event is CGT event A1, described in section 104-10 of the ITAA 1997. This event occurs when there is a disposal of a CGT asset. Subsection 104-10(3) of the ITAA 1997 provides that a disposal occurs when a contract for the disposal is entered into, or, if there is no contract, when the change of ownership occurs. Subsection 104-10(4) of the ITAA 1997 provides that a capital gain arises if the capital proceeds from the disposal are more than the asset's cost base. A capital loss arises if the capital proceeds are less than the asset's reduced cost base. Section 116-20 of the ITAA 1997 defines capital proceeds as the total of: • the money received or entitled to be received • the market value of any other property received or entitled to be received. These terms are further defined in section 103-10 of the ITAA 1997. It states this Part 3-1 and Part 3-3 apply to you as if you had received money or other property if it has been applied for your benefit (including by discharging all or part of a debt you owe) or as you direct even if it is received at a later time. In certain circumstances, a capital gain or loss may be disregarded or deferred. Section 126-5 of the ITAA 1997 provides a CGT rollover where an asset is transferred between spouses or former spouses as a result of a court order or agreement made under the Family Law Act 1975 . This rollover allows the transferee to defer the CGT consequences until they later dispose of the asset. | Detailed Reasoning - Application to your circumstances: You acquired Property A in YYYY for $XX and held it solely in your name as an investment. On DD MM YYYY, you disposed of the property. This disposal constitutes a CGT event A1 under section 104-10 of the ITAA 1997, as there was a change in ownership of a CGT asset. Although you were involved in Family Law proceedings following your separation, and consent orders were executed, Property A was not included in those orders. The property was not transferred to your former partner and was not subject to any division or adjustment under the Family Law Act 1975 . As a result, the rollover relief under section 126-5 does not apply to the disposal of Property A. The disposal was not made under a court order or agreement arising from a relationship breakdown. Accordingly, you are required to calculate and report any capital gain or loss arising from the disposal of Property A in your 20XX-XX income year, based on the capital proceeds received and the asset's cost base. As the property was held for over 12 months, there is a CGT discount of 50%, which means that you pay tax on half of the net capital gain on that asset.