Private ruling: Capital gains tax - disposal of vacant land and marriage breakdown
Published: January 2013

Ruling: Q1: Is any capital gain or capital loss made upon the disposal of the vacant block of land, disregarded? | A1: Yes.

Relevant facts and circumstances: Prior to 20 September 1985, you and your former spouse jointly purchased a vacant block of land (the property). The property has never been used to produce assessable income during your ownership period. After 20 September 1985, a Family Court of Australia court order was issued due your marriage breakdown. Under the court order your former spouse required to transfer their interest in the property to you. The same year their 50% interest in the property was transferred into your name. You have disposed of the property.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 104-10 | Income Tax Assessment Act 1997 Section 126-5 | Income Tax Assessment Act 1997 Section 102-20

Reasons for decision: Summary: While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision. In your situation, you have two separate interests in the vacant land. You have an interest acquired prior to 20 September 1985, with your former spouse. You have an interest acquired from your former spouse under Family Court of Australia court order. | Detailed Reasoning - Original interest: Any capital gain or loss made on the disposal of a CGT asset is disregarded if the asset was acquired before 20 September 1985 (pre-CGT). In your situation, you acquired an interest in your vacant land pre-CGT. Therefore, any capital gain or capital loss made on the disposal of this interest is disregarded. | Detailed Reasoning - Interest acquired after 20 September 1985: Generally, where an asset is transferred to a spouse under a court order as a result of a marriage breakdown, there are consequences for the transferee. However, the roll-over provisions provide that if the asset was originally acquired by the transferor pre-CGT, the transferee is also taken to have acquired the asset pre-CGT. In your situation as your former spouse acquired their interest pre-CGT, so you are also taken to have acquired this interest pre-CGT. Therefore, any capital gain or loss realised on the disposal of this interest is also disregarded.

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.