Private ruling: CGT marriage breakdown rollover
Date of advice: 13 April 2026
Published: 29 June 2026
Ruling period: Year ended 30 June 20YY
Date scheme commenced: 1 July 20YY

Ruling: Q1: Does the marriage breakdown rollover in section 126-5 of the Income Tax Assessment Act 1997 (ITAA 1997) apply when you transferred your share of the property to your spouse? | A1: No.

Relevant facts and circumstances: You purchased the property a number of years ago. The property was in your sole name. You transferred a portion of your share in the property to your spouse. There was no financial agreement or court order in relation to the transfer of your share in the property to your spouse. There was a capital gain on the transfer. You and your spouse are getting a divorce, and your spouse is going to transfer the share of the property back to you.

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

Reasons for decision: Summary: Section 126-5 of the ITAA 1997 outlines that if an asset or an interest in an asset is transferred by a person to their spouse as a result of the breakdown of their marriage or relationship, a roll-over applies provided certain conditions are met. For the roll-over to apply, the CGT event must have happened because of: • an order of a court or court order made by consent under the Family Law Act 1975 or a similar law of a foreign country, • a court order under a state, territory or foreign law relating to breakdown of relationship between spouses. • a financial agreement made under Part VIIIA of the Family Law Act 1975 , • an award made in arbitration referred to in section 13H of the Family Law Act 1975 , or • something done under a written agreement that is binding because of a State law, Territory law or foreign law relating to breakdowns of relationships between spouses and 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. You and your spouse did not have a binding agreement or any other written agreement such as a court order at the time of the transfer. When you transferred the share to your spouse a CGT event occurred. You cannot roll this CGT over as you do not meet the requirements of section 126-5 of the ITAA 1997. You are required to pay the CGT on the transfer. The Commissioner does not have any discretion to wave the CGT which occurred on transfer. The Commissioner can only apply the current law to your circumstances and has no ability to change or alter the legislation in accordance with your situation.